Management Accounts Budgeting Assignment
XGame Ltd
XGame Ltd is a small company which manufactures a popular children's game. The company has decided to produce cash budgets and production budgets to ensure that its operations are better planned and more carefully controlled.
Budgeted production and sales for six months ending 30 June 2016are as follows:
Production Sales
Units Units
Jan 1200 1400
Feb 1200 1300
Mar 1300 1300
April 1400 1500
May 1500 1600
June 1600 1800
Financial Information
- Variable factory overheads are expected to increase by 10% in May and remain at this level in June.
- Fixed factory overheads have been set at a 10% increase on last year.
- It has been decided to increase the selling price from £25 per gameto £27 fromApril onwards. Sales are made on one month's credit. Purchases of the raw materials are two months credit.
- The company has decided to purchase a new more efficient machine. The machine will cost£50,000 and is expected to be paid for in March.
Task1-
The Cash Flow Budget has been prepared but has not yet been adjusted for the New Machinery. Refer to Excel Spreadsheet 1.
You are required to make the adjustment for the New Machinery and prepare brief notes for your manager. The notes should answer the following questions:
a. Explain how the purchase of the New Machinery affects the Cash Flow, and clearly state the problem.
b. Analyse THREE alternative solutions to the problem that you identified.
- You should explain how each solution would overcome the problem
- You should also identify any problems arising from the solutions.
Task 2-
It is now July 2016 and the profit and loss budget variance has been prepared showing the budgeted and the actual figures for the period ending30th June 2016. Refer to Excel Spreadsheet 2.
You are required to complete the A/F and percent columns and prepare brief notes for your manager. The notes should answer the following questions:
a. Identify the THREE significant (largest) variances. Include the level of the significance and state whether favourable or adverse.
b. Analyse the THREE variances that you identified.
- You should identify the possible causes of each variance
- You should provide possible recommendations on how to overcome or prevent the variance in the future.
Attachment:- Data.rar