Distinguish planning decisions from control decisions.

Question 1

Management Accounting

1. Distinguish planning decisions from control decisions.
2. Where does the management accounting function fit into an organization’s structure?

Master Budget

3. What is the master budget and why is it useful?
4. “The sales forecast is the cornerstone for budgeting.” Why?
5. What is budgetary slack? What are the pros and cons of building slack into the budget from the point of view of an employee?
6. Define rolling budgets. Give an example.

Question 2

Flexible Budgets and Variances

1. The following information relates to ABC Table Ltd, a manufacturer of tables for colleges for 2018:

Budget

Sales    44,000 units at €55 per table

Variable cost €35 per unit

Fixed costs €660,000

Actual

Sales 46,000 units at €57 each

Variable costs €33 per unit

Fixed cost €627,000

Net Profit €477,000

Required:

Prepare a Budgetary Control Statement, in a marginal costing format, showing the original fixed budget, the flexible budget, the actual results, and the variances.

1. The following information relates to XYZ Ltd, a company producing chairs for colleges.
2. Why should a company calculate price and efficiency variances?
3. How do managers use variances?
4. How might a manager gain insight into the causes of a flexible-budget variance for direct materials?
5. The following information relates to XYZ Ltd, a company producing chairs for colleges.

Required:

Calculate the following sub-variances

1. Material price variance
2. Material usage/efficiency variance
3. Labour rate/price variance
4. Labour efficiency variance

Question 3

Interpretation of Financial Statement/Performance Appraisal

The following are the summarized financial statement of the Kimberly Hotel Group for the years ended 31 December 2018 and 2019.

Required:

1. Prepare 15 key financial ratios under the headings profitability, liquidity, management use of assets/efficiency, capital structure, and operating for both years. There should be at least two ratios under each heading.
2. Discuss some factors that may have contributed to the performance between 2018 and 2019 for each ratio.
3. Write a report assessing the financial performance of the Kimberly Hotel Group under the headings identified in part (a) of the question.