Produce a budgetary control statement for january

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Reference no: EM131792211

Question 1

Hariba specialises in running courses in public speaking.

The courses are run on premises which the company rents for the purpose and are presented by freelance trainers. The courses are of a standard type and format and can therefore be treated alike for budgetary control purposes.

Hariba currently uses fixed budgets to control expenditure. The following data shows the actual costs of the company for the month of January compared with budgeted figures.

 

                   Actual  

       Budget

                      Variance

Number of courses run

8

10

-2

 

 

 

 

 

£

£

£

Expenditure

 

 

 

Speakers fees

2,720

3,300

580

Hire of premises

1,500

1,750

250

Depreciation of equipment

540

540

0

Stationery

510

600

90

Catering

1,500

1,850

350

Insurance

490

470

-20

Administration

1,900

1,850

-50

 

----------

----------

----------

 

9,160

10,360

1,200

 

-----------

-----------

-----------

Other information

1. Depreciation of equipment is a fixed cost

2. Administration is a fixed cost

3. The budget figures for catering costs and insurance costs include a fixed element as follows:

Catering

£350

Insurance

£220


The remaining elements of those two costs are variable

4. All other costs are variable

Required:

a. Explain why, without further calculations, the above budget is of limited use to managers and describe the potential behavioural implications of using such a statement may have for the manager.

b. Use the information above to produce a budgetary control statement for January, which will give Hariba more meaningful information.

c. Participation in budgeting is widely considered to be an important aspect of a budgeting system. Explain participation in budget setting and discuss the advantages and disadvantages compared to a non-participatory system.

Question 2
Many public sector departments are currently facing a review in spending. The Craigside Ambulance Service has been asked to consider Zero Based Budgeting (ZBB) as a way of reducing its spending.

Required:

a. Explain how ZBB differs from incremental budgeting.

b. Describe how a system of ZBB would be implemented by The Craigside Ambulance Service. Your answer should describe the different stages and you should use examples to illustrate your discussion.

Verified Expert

The paper is about the concept of budgeting and budgeting control. First question involves types of budget and its limitation of fixed budget. It consist of analysis of variance and its analysis. The next part of the question involves participatory budget its advantages and disadvantages to non-participatory budget. Question second consist of Zero Based budgeting and Incremental budgeting and the difference between two concept. The next part of it involved steps the ambulance service perform in implementing the zero based budgeting.

Reference no: EM131792211

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Reviews

inf1792211

7/5/2018 5:57:46 AM

Everything was explained to me in a way that was straightforward. Very well ordered helpr, really had even more an effect than simply my notes. thank you so much for such a great help in my assignments during my semester.

inf1792211

2/15/2018 12:29:10 AM

Question 1a. In the answer include something about how it would make a manager behave. Question 1b. There is no specific layout for flexible budgets and so you need to adjust it to the question. There is no information about revenue and/or profit so you don’t need to do a profit statement. Instead, it asks for a budgetary control statement which means you need to show any variances. Question 1c. Should concentrate more on disadvantages?

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