Budget Information Problem Based In Metroline Travel Engineering Accounting Essay

Budget Information Problem Based In Metro crease decease Engineering Accounting probeThis report out painss a work out instruction problem stem turnd in Metroline Travel engineering and logistic persona. The report also pre displaces a discussion and epitome of a calculate culture problem with theatrical role to the problem resolve frame work.The project also includes the 4 Ps at bottom the marketing mix, bounds of additive budgeting, 10 criteria which argon proposed for good-quality information and a financial analysis of the logistic function extra time cost.These analyses atomic number 18 necessary for competent decision-making. In addition, the report concludes with an investigative examination of these problems and plausible recomm give noniceations to address the companys deficiencies. Also noteworthy, advantages and disadvantages utilise the SMART framework with recommendations and implications leave alone also be outlined.ContentsAssignment 02 1A budget inf ormation problem inwardly the logistical function 1B629/BZX629 Managing 2 merchandising and finance 1Report Prepargond by Kelemn Wyllie 1Senior worldly Support Manager 1Metroline Travel 1Tutor 1Mr. Jay Naik 11Date of the Report 25-08-2010 1Contents 3TMA map 1 5Introduction 5Stakeholder Analysis 6Problem command 7 ask 4 Internal Engineering Value Chain Analysis 7Analysis 910Conclusion 14Recommendation 16 ikon 12 recommendations within the budget throw gyrate 16Bibliography 21Appendix 22TMA Part 2 TMA Activities 38 bodily function 1 calendar week 6 Table 6.1 Three new tasks you could do at work 38 occupation 2 Week 6 Table 6.2 Costs Rewards associated with the proposed 3 new work 39 body process 3 Week 6 Table 6.3 Communicating your proposed idea to peers in the organisation 40natural process 4 Week 7 Table 7.1 How I currently deliver the service and how it could be improve 41Activity 5 Week 8 Table 8.1 Focus group research on a marketing problem 42Activity 6 Week 9 Table 9 .1 ask marketing planning in my own organisation 43Activity 7 Week 9 Table 9.2 The Marketing Plan 44Activity 8 Week 10 Part A What financial information do you spate with at home and at work? 45Activity 8 Week 10 Part B Share with other students what you hope to achieve by studying finance 46Activity 9 Week 10 Table 10.1 Stakeholders financial information needs 47Activity 10 Week 10 Table 10.2 Financial information requirements 48Activity 11 Week 11 A accurate version of Table 11.1 Garden Furnishings solving the problem 49Activity 12 Week 12 A Word Document noting your/your line motorbuss budgetary information requirements 50Activity 13 Week 12 Part A A completed version of Table 12.2 Template for gold budget 51Activity 13 Week 12 Part B A Word document discussing practical application of master and cash budget information to problems of Garden Furnishings 52Activity 14 Week 12 Resolving a budget information problem 53TMA Part 1IntroductionAs senior physical theater re strainor in a public bus company c all tolded Metroline Travel. A subsidiary company owned by the Singapore based ComfortDelGro Corporation. See Appendix for profit and dismissal account and other tie in financial information as of 31st march 2010. The worlds second largest listed land transport company. The senior substantive music director supervises a team of 15 existent support coachs across London. These personnel are the logistical team and their core responsibilities are the supply, storage and procurement of parts to engineering (core natural attain). The logistical hierarchy is illustrated in figure 1. realise 1 Metroline Organisational Structure (Logistical Department)Stakeholder AnalysisStakeholder analysis is a useful technique use to identify the key people within the logistical function framework. These key personnel are rattling grand to the organizational structure because they have tremendous power and influence which affects the performance and future v ision planning allocated from senior handlement. Managers should consider the organisations responsibilities and commitment to all its stakeholders. ( correspondence marketing and financial information, P. 196) According to Mendelows matrix these move be grouped into to 4 categories which are illustrated figure 2 in Metroline Travel below encipher 2 Mendelows matrixHighLowC- Keep SatisfiedD- Key PlayersA- Minimal EffortB-Keep certifiedLowHighPowerLevel of InterestA- DriversB- Operation, SuppliersC- Finance departmentD- Engineering (Core Activity)AssumptionsTo make the problem more spring framework passenger cars have complete autonomy all over their extra timeMaterial conductor get invoices on a Friday in May, June and JulyBudgets are formed outside the control of the logistical functionCost lavatory be divided in to fixed and variable costThe material managers are constraint to 19 hours per week extra time (limiting factor) in line with the EU working time directiveProblem StatementBudgets are utilise for detailed planning in the allocation of resources in a business. This information is important to management and stakeholders alike in assessing the activities and performance of an organisation, illustrated in Figure 3. The logistical function overtime budget is based on an incremental budgeting principle with an assiduousness costing approach for allocating cost per material managers.The incremental budgeting principle is based on 9% of their base salary plus current inflation. However, the material mangers overtime for May, June and July allowance were over budgeted which would affect workers long term penuryal aim working on a pass. This over-budget affects the controlling, planning and decision-making of its activities. This overtime process is very important in maintaining a reliable service to engineering.Figure 3 Information directionSenior material support managerMaterial mangersEngineeringThe take account chain consists of a series of activities that create and builds significance in maintaining a bus. An organisation can consider the activities in its value chain and assess if they are value added activities or non-value added activities. (Understanding marketing and financial information, P. 190) This is illustrated in figure 4.Figure 4 Internal Engineering Value Chain AnalysisEQUIPMENTENVIRONMENT early(a)OTHERINPUTMACHINERYOUTPUTTOOLSQUALITY CHECKSREPAIR REPORTENGINEERSBUS REPAIRMANAGEMENT partGARAGEOVERTIMEOTHERMATERIAL MANAGERSOTHERPROCESSPEOPLEAs their line manager I was tasked by the head of purchasing and logistics to investigate and place corrective actions to bring this over budgeting behind under control. This over- budget is illustrated in figure 5.Figure 5. Material Managers Overtime budget as of the 31 July 2010MONTHSJanuaryFebruaryMarchAprilMayJuneJulyUSERMaterial manager 1800900 vitamin C deoxycytidine monophosphate445520549Material manager 20220200220458612323Material manager 30100500461552 rec eipts66Material manager 4050100110100222366Material manager 5060631100223141316Material manager 620010021125030044342Material manager 70600054642335559Material manager 810202000452500445Material manager 920001300452900498Material manager 105000450100626613Material manager 11100200115225100225889Material manager 12020025445252225789Material manager 132000255235231995145Material manager 1401202212285452445Material manager 15010012144200100112 integrality =2,1022,6502,5462,4664,5926,0416,457Budget4,0004,0004,0004,0004,0004,0004,000Cost variance1,8981,3501,4541,534-592-2,041-2,457 perverseadverseadverseTotal Budget- 48,000Monthly allowance 4,000Daily rate- 12.60Weekend rate- 20.23AnalysisMarket partitioning is an important marketing task described by Bonomo and Shapiro (1983), cited by Sargeant (2009). It has a number of advantages which can be used to identify existing and potential customers. By placing customers into different groups by successful targeting their needs and managing their expectations.Figure 5. Organisational market segmentation criteria (Operating variables)Engineering (core activity) Heavy userSuppliers strength userFinance departmentMedium userOTHERLight usersAfter speaking with the material managers and investigating their overtime sheets for the months for May, June and July submitted to payrolls. The investigation employ the problem solving framework (The Managers Good Study Guide, PG 69). I found that the material managers were working more on a weekend to incur the over budget this is illustrated in figure 6 in appendix, which the daily rate is 12.60 while the weekend rate is 20.23 The budgeting system can seriously influence the level of motivation and culture of an organisation, because budgets play a central role in (Understanding marketing and financial information, P. 155).This was because of an addition of activity 40 plus financial invoices received from the finance department over May, June and July were received on a Friday and could not be completed that day because of day to day activities. These invoices needed to be fixed as soon as possible and took some time to process on the data base system for payment for the following week from finance illustrated in figure 7 . In addition, the limitation of the incremental budgeting, this budgeting type has inefficiencies and imperfections which were not noticed, until the increase of activity.Figure 7 total financial invoice hours to goal development the 4 Ps-Price- Was the increase in the practice session of overtime to complete the receipt of engineering invoices which will affect the material managers long term motivation coming into work allocating resources and imposing constraints on activity (Understanding marketing and financial information, P. 155).Product- Was the volumes and frequency of the engineering invoices given on a Friday identifying those areas that require corrective action (Understanding marketing and financial information, P. 155). Promotion- The finance manager a senior manager requesting this activity be completed as soon as possible assessing how well managers have carried out their responsibilities (Understanding marketing and financial information, P. 155).Place- Is material managers working location assessing how well managers have carried out their responsibilities (Understanding marketing and financial information, P. 155).Budgeting is needed to provide managers at different levels with useful information to keep on the right road. This is illustrated in 11.2 the pyramid of purpose. This information is received for decision making.Corporate level- fork out a bus service to Transport for LondonMaterial manager overtimeSupport engineeringProvide a bus service to Transport for LondonProvide parts and technical informationBusiness level- Support engineeringOperational level-Provide parts and technical informationOperating Level-Material manager daily overtimeAnalysis of information criteria not being metT here are 10 criteria which are proposed for good-quality information for decision-making this is illustrated in figure 8. However the material managers overtime sheets were being sent directly to payroll, which added to the budget information problem.1 Relevant- Their line manager had no knowledge of Material managers overtime7 Timely- No Knowledge of Material managers overtime being over budget until at the end of the month8 Communicated to the right person- Overtime sheets were sent directly to payrollsFigure 8 10 criteria which are propose for good-quality information for decision-making10Less costly than the value of the benefits it provides9 Communicated via the right channel8 Communicated to the right person7Timely6Concise5Trustworthy4 perform3Sufficiently accurate2Clear1RelevantGood-quality information for decision-makingAnalysis of the absorption costing approachFrom the cost analysis, the logistical function has a total budget figure of48,000. This is careful by applying t henormal budgeted hourly rate of 12.60 which is the budgeted man (direct take) hours per manager according to normal capacity illustrated in figure 9, by the using the incremental budgeting principle.Figure 9 cost assignment is both validatory cost- variableOvertime brought on by finance invoicesCost objectBus repair forthwith cost- fixedWeekly overtime to provide parts and technical information to engineeringThe indirect and direct costs are equally distributed illustrated in figure 10, using the absorption costing approach which all cost is allocated to the main budget. This prevents monitoring of actual hours against theactual spend within the budget. The resulting variancesshould have enabled the logistical function to monitor the productivity and efficiency of all the managers.Hopefully, you can then see if there is a pose or a reason for persistent adverse variance. The analysis will provide you with some clues closely incentivize or modifysuch behaviour via the budget buil ding process.Figure 10 Relationship between costsDirect costVariable costOvertime brought on by finance invoices 20.23 decided costWeekly overtime to technical information to engineering 12.60Indirect cost pass away-even analysisBreak-even analysis identifies the level of activity and risk at which an organisation can generates no surplus or deficit. In the case of an over-budgeting issue it relates to the point where the logistical function is in budget and will not be penalized for being over spent illustrated in figure 11.TotalJanuaryFebruaryMarchAprilMayJuneJuly2,1022,6502,5462,4664,5926,0416,457Over BudgetNet Total = 26,854Total Budget- 48,000Monthly allowance 4,000= 48000-26,854 = 21,14621,146(Fixed cost)/ 6 months = 3,524 per month in overtime remaining3,524/ 15 material managers= 234.93 per managerDirect cost 234.93/ 12.60 = 18.64(Contribution) weekly hours per monthorIndirect cost 234.93/ 20.23 = 11.61(Contribution) weekend hours per monthFigure 11 Break-even analysisConclu sionFrom the analysis, there is a clear budget information problem within the logistical function the problem solving frame work has identified several problem areas. By Using the 4 Ps to illustrate Material managers working more on a weekend which has a higher premium rate than daily working. The limitations of the incremental budgeting as an effective forecasting tool. 10 criteria which are essential for good-quality information for decision-making. In which 3 criteria are not being met. In addition, not identifying true cost drivers within the budget. In which material managers that are working more on a weekend are not identified. These factors combined have affected the logistical function staying within their overtime budget.RecommendationBudgeting is part of the control process in organisations the control loop (Understanding marketing and financial information, P. 134). The scene objectives, planning and implementing tasks, monitoring progress, reviewing results and adjusti ng tasks are crucial in staying and planning budgets illustrated in figure 12. Based on the investigative examination and analysis of the problems these recommendations should improve the over- budget situation and return productivity.Figure 12 recommendations within the budget control loopCheck against overtime sheets past weeksIf not working- re take off from the begin of the loopOperational levelProvide parts and technical informationUse recommendation outlined in action plan to control material manger overtime budget- budget building processUsing the SMART framework from (Understanding marketing and financial information, Pg 122) the action plan will be outlined as the followingRecommendationTimelineStrengthsWeaknessesOpportunitiesThreats(Price)Material manager weekly overtime sheets sent to senior material manager1 week to startGiving back control to the line manager by upward(a) the Relevant, Communicated to the right person and Timely elements of information extend of Senior material manager workloadTo start a new process, which can be adapted throughout the company and monitor usage for near year budget reviewMaterial managers might feel disempowered which might affect there motivation(Place)Weekend overtime needs pre-approval1 week to startGiving back control to line manager by improving the control element of the budgeting loop. In addition the material having to work on a weekend might increase their morale subjoin of Senior material manager workloadTo start a new process, which can be adapted throughout the company and monitor usage for efficiency of material mangersIdentification of cost driversControl of weekend working (indirect labour)Material managers might feel disempowered which might affect their motivation(Product) + PromotionFinance manager giving the invoices on a Monday kinda of a Friday2 weeks to startSpread the work load of the material managerDirect labour costIncrease of material managers weekly workloadWeekend overtime can be u sed to complete other essential engineering taskBuild up of daily work that carried over from day to dayRolling budgetsNext financial yearFlexibility is built into the budgeting system to deal with any changes arising from day to day activitiesUpdated much more frequently increasing work loadIt abet a high level of learning and flexibilityRolling budget can be dear(predicate) in terms of management and administrating time. Which might affect management morale and less time to manageActivity based costingNext financial yearUnderstand what and where is driving costs very time consuming, checking each material managers overtime sheet for cost driversUnderstand of cost driversbefore an certified decision can be reachedIf inappropriate drivers are selected. then it could lead to incorrect decisionsresulting in loss of efficiency,de-motivation of staff and eventual failure of the businessWork shredding to engineering administration clerks2 weeksReduce in material manager weekend overti me- It asserts, on quite strong evidence, that 80% of our results are generally produced by 20% of our effort and that the remaining 80% of our effort is swallowed up in achieving that last 20% of our resultsIncrease inadministration clerksworkloadTraining have to be provided- costTraining and developmentIncrease in errors by new users. Responsibility still remains with material manager1640 WordsReferencesB629/BZX629 Managing 2 Marketing and finance Understanding marketing and financial information by Produced for the course team by Andrew Lindridge and Haider Ali (Marketing) and Graham Francis and Michael Lucas (Finance) The free-spoken University, Walton Hall, Milton Keynes, MK7 6AA 2010 The Open UniversityThe Managers Good Study Guide by Academic Editor Sheila Tyler 2007 The Open University Walton Hall, Milton Keynes MK7 6AABooms, B. H. and Bitner M. J. (1981) Marketing Strategies and Organization Structures for service firms in Donnelly, J.H. and George, W. R. (eds) (1981) Mar keting of Services, Chicago American Marketing Association, pp. 47-52.Hope, J. and Fraser, R.(2003)Beyond Budgeting How Managers Can Break Free from the Annual Performance Trap, Boston, M.A., Harvard Business School.Francis, G. 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