Prepare the forecasts and budgets of the new plans and strategy of this company for the next 3 years.
Conduct the company towards its desired goals and objectives for the next 3 years.
BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 BUDGETING AND CONTROL PROJECT INTRODUCTION Your team has been appointed as the new Management Accounting Committee of one specific company – Analyze the present situation of this company and its potential SWOTS (Strengths, Weaknesses, Opportunities and Threats). – Prepare the forecasts and budgets of the new plans and strategy of this company for the next 3 years. – Conduct the company towards its desired goals and objectives for the next 3 years PROJECT’S PROCEDURE: 1) Choose your partners to form your project’s work team: 3 members per group. 2) In class: group work on the topics, discussion and presentation preparation.
Professor group guidance. 3) Homework: Work in group and prepare a unique group presentation for each session’s presentation. You have to use power point or similar.
4) Group presentation in each session: All of the members of the group have to participate (mandatory individual participation). So, you must distribute and schedule
your group presentation among your colleagues (maximum 6 minutes per presentation). Iam going to grade each student presentation and class work on the project 5) Feed-
back, readjustments, changes and modifications of your project to improve it. 6) Submission of each project on turnitin (all of the group members have to submit the
same group project in each one of their turnitin accounts). Use a word document different of your presentations. BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 PROJECT CONTENT AND TOPICS TO BE COVERED 1. Choose a specific sector or industry you would like to analyze and base your company. 2. Describe your company in terms of (you can use real data or made-up data): a. Portfolio of products and services: The products and services you are going to
produce, offer and sell. Define its composition, elements, etc. b. Based on 2a define your sales MIX. c. Your market, your clients and segments, your suppliers, your
resources, your competitors, your outsourcing, … d. Your company’s present specific size (number of products/ services, level of total revenues, total costs, total
profits, etc) 3. INITIAL FORECAST AND BUTGETING APPROACH: a. Define and describe your mission and strategies for the next 4 years. Use strategic management (marketing and selling,
operations and financial strategies) and the generic strategies. b. Based on 3a, define and describe your initial total expected forecasts and budgeting for the next
4 years: Your total selling, economic and market’s positioning goals. Define your expected objectives (quantitative and qualitative). 4. Define and describe your company’s situation in terms of: a. The most important processes carried out by your company (manufacturing, production of services,
administrative, selling, after sales, warehousing, distribution, …). i. Describe: 1. the inputs/ resources of each one of these processes (raw materials, human
resources, management resources, IS resources, etc) 2. the investments of each one of these processes (machines, plants, offices, stores, etc). ii. Which of them do
you consider as crucial in your economic success. Provide reasoning. iii. Find the most important activities in each one of these processes. Provide reasoning. 5. Find, define and describe the following items of your company: a. All of the different kinds of revenues of your company b. All of the different kinds of costs of
your company BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 i. Classify them by its nature. ii. For each cost indicate its magnitude and grade of impact in your company iii. For each cost indicate what type of variables
influence it more in its amount. They could be internal or external variables. Analyze if they are controllable or not and how you would control them. 6. Define and describe the different PROFIT OBJECTS OR CENTERS of your company (revenues, costs and profits objects of costs). – You might use this table: NAME OF THE OBJECT OR CENTER OBJECT OF COST OBJECT OF REVENUE OBJECT OF PROFIT PRIORITY GRADE OF THE IMPACT ON THE NOI IMPACT ON YOUR EXPECTED BUDGET – Analyse its importance and grade of impact in your strategy, mission and your forecasts and plans. 7. COST ALLOCATION: Allocate all of your company’s costs in each one of the different objects of costs and profits that you have previously defined. i. Identify the
direct and indirect costs of each object of cost. ii. For each one of the indirect cost in each object indicate possible allocation criterias. Remember that they have
to be measurable. iii. Choose one definitive allocation criteria for each indirect cost and provide reasoning of your choice. 8. COST BEHAVIOUR: Analyse how each one of your costs will react to changes in your different levels of activity of your expected forecasts and budgets based on your
strategy and objectives for the next 3 years. a. Find and identify the variable, fixed, semi fixed costs of each object of cost. BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 b. Based on your strategy, objectives and forecasts for the next 3 years predict its trends and behaviour. You can also use functions, charts or graphs in your
explanations and analysis c. Find and describe some probable opportunity and sunk costs for the next 3 years. 9. Choose 3 objects or centres of costs: – Explain why you have chosen these cost centers/objects – Define the manager job position in charge of each object of costs.
What are their main goals and tools?. What do you consider to be important in their jobs? – CONTROL OF THE OBJECT/ COST CENTERS: o Explain different ways or methods
to measure them. o Explain what it would happen if in these centers we would not measure well its costs, revenues, and profits. o Explain different corrective and
preventive actions to be taken in case of deviation of our predictions. 10. INVENTORY ACCOUNTS a. Define each one of your inventory accounts in you balance sheet b. Explain which of them are crucial in your daily operations and their grade of importance. Provide
reasoning. c. Define its effects on your company’s strategy, objectives and forecasts 11. PREPARE THE FOLLOWING PRESENT INCOME STATEMENTS (Choose one of your objects of costs (topic 9) and use excel sheets): a. Define your annual present costs, revenues and profits using real data or made-up data (professor assistance) for one of your OBJECTS OF COSTS. b. Annual
traditional income statement of the company. Analyse this statement and make conclusions. c. Annual Direct Costing approach income statement. Analyse this statement
and make conclusions. d. Annual Variable Costing approach income statement. Analyse this statement and make conclusions. 12. PREPARE COST-VOLUME-PROFIT ANALYSIS a. Choose an object of cost and prepare its CVP analysis BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 b. Based on your present sales mix calculate your company’s overall contribution margin ratio. c. Find the overall break-even point (overall BEP) and each object of
cost break-even point (object of cost BEP). Calculate the overall present margin of safety of your company d. Describe which cost of structure is better in your
company in different potential and probable scenarios of your company, sector and market for the next 3 years. 13. BUDGETING AND CONTROL. Starting from your current situation (question 11 income statements- THE INCREMENTAL APPROACH) and based on a specific market and sector
scenario, prepare your forecasts and predictions using excel sheets based also on your selected objectives, strategies and goals for the next 3 years. INCOME STATEMENT BUDGETS a. Prepare your company’s sales budget for the next 3 years (per quarter of year and per year) b. Prepare your company’s production budget for the next 3 years (per
quarter of year and per year) c. Prepare your company’s direct materials budget for the next 3 years (per quarter of year and per year) d. Prepare your company’s
direct-labor budget and manufacturing overhead budget for the next 3 years (per quarter of year and per year) e. Prepare your company’s selling, marketing and
administrative budgets for the next 3 years (per quarter of year and per year) f. Consolidate all of the previous budgets in a total yearly budget CASH BUDGETS g. Prepare your cash budgets only for the next year (per quarter of year and in total) BUDGETING VARIANCE ANALYSIS h. Define 2 different probable scenarios for the next 3 years and its different strategic options that your company could carry: i. For each one, test and check the
variations and different impacts on the income statements budgets and cash budgets. You can choose a more pessimistic scenario and a more optimistic scenario. BUDGETING AND CONTROL ©COPYRIGHT MANEL ARRIBAS IBAR 2017 ii. Which scenario do you prefer for your company?. What kind of strategies would fit best in each new scenario? iii. Based on this variance analysis, would you like
to vary your initial objectives, goals, resources, investments to secure your economical position?. EXTRA POINTS ON THE STUDENTS PROJECT’S GRADES: – TOPIC 11: PREPARE AND ADDITIONAL INCOME STATEMENT ANALYSIS FOR AN ADDITIONL OBJECT OF COST (questions a, c and d) (MAXIMUM 7 ADDITIONAL POINTS) – TOPIC 13: EXPAND
YOUR BUDGETS PER OBJECT OF COST (per quarter and annually). (MAXIMUM 10 ADDITIONAL POINTS) – DEFINE HOW WOULD YOU CONTROL YOUR BUDGETARY PLANNING TO ASSURE THAT THE
OBJECTIVES SET DOWN AT BUDGETING ARE ACHIEVED. MAKE SOME RECOMMENDATIONS TO YOUR COMPANY. (MAXIMUM 5 ADDITIONAL POINTS)