Explain the objectives of a budgetary control system

Assignment Help Financial Management
Reference no: EM135404

Q1

Vodafone Group Plc is a British multinationalwhich is one of the world's largest mobile telecommunications companieswith over 404 millionsubscribers. Vodafone owns and operates networks in over 30 countries and has partner networks in over 40 additional countries. Vodafone also owns 45% of Verizon Wireless, the largest mobile telecommunications operator in the USA. Vodafone has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisationof £89.323 billion as of 5th April 2013 when its share price stood at 182.6p

Presented below are its financial statements for the period 2008-2012.

Vodafone Group Plc

Year ended

Year ended

Year ended

Year ended

Year ended

Statement of Comprehensive

31st March

31st March

31st March

31st March

31st March

Income


2012

2011

2010

2009

2008



£m

£m

£m

£m

£m

Revenue


46,417

45,884

44,472

41,017

35,478

Cost of sales

-31,546

-30,814

-29,439

-25,842

-21,890

Gross profit

14,871

15,070

15,033

15,175

13,588








Selling & Distribution Costs

-3,227

-3,067

-2,981

-2,738

-2,511

Administration Expenses

-5,075

-5,300

-5,328

-4,771

-3,878

Share of result in associates

4,963

5,059

4,742

4,091

2,876

Impairment losses

-4,050

-6,150

-2,100

-5,900

0

Other income and expense

3,705

-16

114

0

-28

Operating profit

11,187

5,596

9,480

5,857

10,047

Finance income

456

4331

716

795

968

Finance costs

-2,094

-429

-1,522

-2,463

-2,014

Profit on ordinary activities before taxation

9,549

9,498

8,674

4,189

9,001

Income tax charge

-2,546

-1,628

-56

-1,109

-2,245

Profit for the year

7,003

7,870

8,618

3,080

6,756

Vodafone Group Plc

31st March

31st March

31st March

31st March

31st March

Comprehensive Statement of Position

2012

2011

2010

2009

2008


£m

£m

£m

£m

£m

Assets






Non-current assets






Goodwill

38,350

45,236

51,838

53,958

51,336

Intangible assets

21,164

23,322

22,420

20,980

18,995

Property, plant and equipment

18,655

20,181

20,642

19,250

16,735

Investments in associates

35,108

38,105

36,377

34,715

22,545

Other investments

791

1,381

7,591

7,060

7,367

Deferred tax assets

1,970

2,018

1,033

630

436

Post Employment Benefits

31

97

34

8

65

Trade and other receivables

3,482

3,877

2,831

3,069

1,067

Total Non Current Assets

119,551

134,217

142,766

139,670

118,546

Current assets






Inventory

486

537

433

412

417

Taxation recoverable

334

281

191

77

57

Trade and other receivables

10,744

9,259

8,784

7,662

6,551

Other investments

1,323

674

388

0

0

Cash and cash equivalents

7,138

6,252

4,423

4,878

1,699

Total Current Assets

20,025

17,003

14,219

13,029

8,724

Total Assets

139,576

151,220

156,985

152,699

127,270

Equity






Share capital

3,866

4,082

4,153

4,153

4,182

Share premium account

154,123

153,760

153,509

43,008

42,934

Treasury Shares

-7,841

-8,171

-7,810

-8,036

-7,856

Retained profits/losses

-84,184

-77,661

-79,655

-83,820

-81,980

Other Reserves

10,971

15,545

20,184

130,857

120,763

Total equity shareholders funds

76,935

87,555

90,381

86,162

78,043

Non-controlling interests

1,267

6

429

-1,385

-1,572

Total Equity

78,202

87,561

90,810

84,777

76,471

Liabilities






Non-current liabilities






Long-term borrowings

28,362

28,375

28,632

31,749

22,662

Taxation liabilities

250

350

0

0

0

Deferred tax liabilities

6,597

6,486

7,377

6,642

5,109

Post employment benefits

337

87

237

240

104

Provisions

479

482

497

533

306

Trade and other payables

1,324

804

816

811

645

Total Non Current Liabilities

37,349

36,584

37,559

39,975

28,826







 

 

 

 

 

 

Current liabilities






Short-term borrowings

6,258

9,906

11,163

9,624

4,532

Taxation liabilities

1,898

1,912

2,874

4,552

5,123

Provisions

633

559

497

373

356

Trade and other payables

15,236

14,698

14,082

13,398

11,962

Total Current Liabilities

24,025

27,075

28,616

27,947

21,973

Total liabilities

61,374

63,659

66,175

67,922

50,799

Total equity and liabilities

139,576

151,220

156,985

152,699

127,270

Date

31st Mar 2012

31st Mar 2011

31st Mar 2010

31st Mar 2009

31st Mar 2008

Company share price

162.44p

157.83p

128.19p

97.10p

113.39p

FTSE100 Share Index

5,768.50

5,908.80

5,679.60

3,762.90

5,702.10

Required

Write a business report to the board of directors of the company analysing the company's financial performance from 2008-2012.

Q2

The Harold Shipman Private Healthcare Clinic Ltd specialises in hip, knee and shoulder replacement operations that it carries out for private health insurance firms and for some NHS Trusts. As well as providing these surgical procedures it offers pre-operative and post-operative care in a fully equipped private hospital for patients undergoing these procedures. Surgeons are paid a fixed fee for each procedure they perform and an additional amount for each follow up consultation which are given if post operative complications arise. No extra fee is charged to patients for follow up consultations. All the other staff receives annual salaries.
The company's overhead is currently apportioned on revenues to each surgical specialism. The following forecast data for 2014 is made available:

Medical Procedure



Hip

Knee

Shoulder

£ Income for 2014



4,800,000

8,000,000

2,400,000

£ Cost per procedure


8,000

10,000

6,000

Av time per procedure in hours

2

1.2

1.5

£ Surgeons fee per procedure


1,200

1,800

1,500

% of procedures with complications

8

5

10

£ surgeons fee consultation 2014

300

300

300

£ cost medical supplies per procedure 2014

400

200

300








Overheads





£

Theatre preparation




864,000

Operating theatre usage




144,9000

Nursing and ancillary services




5,428,000

Administration





1,216,000

Other overheads





923,000

Total overheads





9,880,000

Required
i. Prepare a Marginal Cost Analysed Income Statement for 2014 from the above data to identify total and individual medical procedure contributions and profits (apportion the overheads as indicated above to each procedure). Identify the profit and contribution per procedure

ii. The senior surgeon has voiced the opinion that apportioning overheads on the basis of revenues is misleading and instead should be apportioned on the number of hours incurred on each procedure. Reconstruct the Marginal Cost Analysed Income Statement to reflect this proposed accounting treatment. Also identify the profit and contribution per procedure. Comment on your results.

iii. The Scutari NHS Trust has approached the clinic to undertake some additional knee operations. This would involve operating on a further 50 patients which the clinic has capacity to handle. The trust is offering to pay £250,000 for fulfilling the contract. Advise the clinic what decision should be made regarding the proposed contract based on financial grounds.

Q3.

You have been appointed as a management intern in the Carbon Neutral Group Plc an international company manufacturing alternative green energy systems. This involves you obtaining a wide company experience by working in different divisions of the company. Currently you have been seconded to the production department.

At a production departmental meeting you hear Richard Head the production manager state that,

"Budgeting is a waste of time. I don't see the point of it. It tells us what we can't afford but it doesn't keep us from buying it. It simply makes us invent new ways of manipulating figures. If all levels of management aren't involved in the setting of the budget, they might as well not bother preparing one."

Required:

In an academic essay identify and explain the objectives of a budgetary control system and discuss the concept of a participative style of budgeting in terms of the objectives you have identified supported by credible academic citations.

Reference no: EM135404

Questions Cloud

Do protectionist policies benefit producers : Do protectionist policies benefit producers, consumers, workers, or the government
Queuing theory-clarke and wright algorithm : How many turnstiles must be opened in each direction every morning and describe the suppositions underlying the solution of this problem by using queuing theory.
Introduction to statistical process control : Write introduction to STATISTICAL PROCESS CONTROL and Explain the use of SPC tools used at D2D
Accounting and financial statements : Demonstrate an understanding of governmental and not-for-profit accounting and financial statements. Analyze transactions unique to governmental and not-for-profit entities to determine potential outcomes
Explain the objectives of a budgetary control system : Identify and explain the objectives of a budgetary control system and discuss the concept of a participative style of budgeting.
What is the unregulated competitive equilibrium : What is the unregulated competitive equilibrium and what is the social optimum specific tax (per unit of output of gunk) results in the social optimum
Explain an economy is initially in equilibrium : Explain an economy is initially in equilibrium at the natural level. The central bank increases the money supply.
How many popsicles will be sold-supplied : How many popsicles will be sold/supplied each day in the short run if the price rises to $4 each per day
What are the annual accounting costs for the firm : What are the annual accounting costs for the firm described above? What are the annual explicit costs for the firm described above?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd