案例復(fù)習(xí)課件chapter

1、2022/10/111F5-Chapter 8 Lecturer: Ji WeiliBudgetary systemsChapter Preview2Traditional budgetary systemsAlternativebudgetary systemsBudgetary systems Fixed & flexible budgetsIncremental budgetingRolling budgetsZBBABBBeyond budgetingObjectives of budgetary systemsPlanning and control cycle 3OverviewP

2、lanning and control cycle Objectives of a budgetary planning and control systemBudget perparationVarious budget types32022/10/114ObjectivesCorporate objectivesProfitabilityGrowthMarket shareCash flowROCEEPS ObjectivesUnit objectives-specific to individual business units2022/10/115ObjectivesCorporate

3、 objectives may conflict with divisional objectivesSetting objectives is a political process using bargainingConflict is resolved using prioritisation, compromise, negotiation and satisfying.Goal congruence 2022/10/1166Respond to divergences from planThe planning and control cycleIdentify potential

4、strategiesEvaluate strategiesImplement the long-term plan Choose alternative courses of actionMeasure actual results and compare with planIdentify objectivesPlanning processControl process2022/10/117Planning and control Determine objectivesPlanning set budgetActual operationsControl - variances2022/

5、10/118Objectives of a budgetary systemsAchievement of the business objectivesMotivationsCompel planningCommunicationsControl systemCoordinate activitiesObjectives2022/10/119Planning and control in the performance hierarchyLong-term and short-term planningPlanning hierarchy2022/10/1110SchoolProfit-ma

6、king businessObjectiveTo provide a high quality of education, so that within 5 years, 95% of pupils achieve grades A or B in their final examinationTo achieve a 20% return on capital every year.To increase earnings per share by 10% every year for the next 5 yearsStrategic plans(1)Reduce class size.R

7、aise new funds to invest 1 million in new equipment and facilities.Attract the highest quality of teacher by paying good salariesCut cost by 15% in domestic markets.Expand into markets in Asia.Increase domestic market share by 10% in the next 5 years.2022/10/1111SchoolProfit-making businessTactical

8、plans(2)Set a target for this year for examination results.Increase the number of teacher by 10% by the end of the year.Plan the launch of a fund-raising campaign.Carry out a cost reduction program next year.Establish business relationships with customers in Asia and carry out market research.To inc

9、rease the size of the work force in order to improve total salesOperational plans(3)Prepare teaching schedules for next term.Monitor the marks gained by students in mock examination.Provide whiteboard training to teaching staff.To obtain prices from more than one supplier before purchasing materials

10、.Offering a bulk purchase discount of 10% to a major customer.2022/10/1112Other aspects of budget preparationlong-term planlimiting factorbudget manualsales budgetproduction capacityfunctional budgetsdiscretionary costsconsolidation and coordinationcash budgetmaster budget2022/10/111313Participation

11、 in budgetingBudget-setting styles imposed (top down) participation (bottom up) negotiated2022/10/1114 AdvantagesDisadvantages Top management prepare a budget with little on no input from operating personnelTop-down budgeting2022/10/1115 AdvantagesDisadvantages Budgets are developed by lower-level m

12、anagers who then submit the budgets to their superiors.Bottom-up budgeting2022/10/1116Negotiated style of budgetingIn top-down budgeting, operational managers will try to negotiate with senior managers.In bottom-up budgeting, senior managers usually review and revise budgets presented to them.2022/1

13、0/1117Traditional budgetary systems Incremental budgeting add a certain percentage to last years budget to allow for growth and inflation.It encourages slack and wasteful spending to creep into budgets.Example: P184-5.32022/10/1118Fixed budgets VS flexible budgets-change as activity level changes by

14、 recognising different cost behaviour patterns-on the basis of an estimated volume of production and an estimated volume of sales.- not adjusted to reflect actual activity levelsFixed budgetsFlexible budgets2022/10/1119Zero based budgetary systems (ZBB) The initial budget is zero and every items of

15、expenditure has to be justified in its entirety to be include.Step 1Step 2Step 3Define decision packagesEvaluate and rankAllocate resources2022/10/112020Zero based budgetary systems (ZBB) Advantages Identify and removes inefficient and/or obsolete operationsProvide a psychological impetus to employe

16、es to avoid wasteful expendituresLeads to a more efficient allocation of resources 2022/10/1121Zero based budgetary systems (ZBB) Disadvantages Involves time and effortCan cause suspicion when introducedCosts and benefits of different alternative can be difficult to quantityRanking can prove problem

17、atic2022/10/112222Activity based budgeting (ABB) Define the activities and using the level of activity to decide how much resource should be allocated, how well it is being managed and to explain variances from budget.Example: P223-4.22022/10/1123Principles of ABBIt is activity which drive costs and

18、 the aim is to control the costs drivers.1Not all activities are value adding.2Most departmental activities are driven by demands and decisions.3Additional measures are needed.4Not all activities are value adding.22022/10/1124Rolling/continuous budgets Continuously updated by adding a further accoun

19、ting period when the earlier accounting period has expired.1234567891011121234Annual12MonthQuarterSemiannual2022/10/112525Rolling/continuous budgets Advantages Reduce uncertaintyUp-to-date budget always availableRealistic budgets are better motivators Disadvantages Involves more time, effort and money2022/10/112626Beyond budgetingCriticisms of budgetingTime consuming and expensiveProvide poor value to userFail to focus on shareholder valueToo rigid and prevent fast respondStifle product and strategy