PLANNING AND CONTROL

Planning and Control

LEARNING OBJECTIVES

After studying this report, the Directors of Peeko Design will be able to:

Evaluate the performance of the company

Fine out the reasons for the deviation from the budget

Understand the importance of flexible budget in forecasting

Part A: Budgeted Income Statement for year ending 31st December 2012

Peeko Design

Income Statement

6210

Variable cost

Direct Materials

931.5

Direct Labor

1863

-2795

Contribution

3415.5

Fixed Cost

Salaries

720

Overheads

1320

-2040

Profit

1375.5

Solution 2

Cash budget for the year 2012

Cash Receipts

 

 

 

 

 

 

 

 

 

 

 

sale

750

480

450

480

660

720

900

450

390

390

330

450

Cash Payments

 

 

 

 

 

 

 

materials

90 = last years Creditors

 

labor

90

72

67.5

72

99

108

135

67.5

58.5

58.5

49.5

67.5

Salaries

144

135

144

198

216

270

135

117

117

99

135

153

OH

60

60

60

60

60

60

60

60

60

60

60

60

Total out

43.3333

43.3333

43.3333

43.33333

43.3333

43.3333

43.33333

43.33333

43.33333

43.33333

43.3333

43.3333

 

337.333

310.333

314.833

373.3333

418.333

481.333

373.3333

287.8333

278.8333

260.8333

287.833

323.833

cash flow

 

 

412.667

169.667

135.167

106.6667

241.667

238.667

526.6667

162.1667

111.1667

129.1667

42.1667

126.167

open

 

close

375

787.667

957.333

1092.5

1199.17

1440.83

1679.5

2206.167

2368.333

2479.5

2608.67

2650.83

 

787.667

957.333

1092.5

1199.167

1440.83

1679.5

2206.167

2368.333

2479.5

2608.667

2650.83

2777

 

 

 

 

 

 

 

 

sales from the month before *900/6000

 

Sales *1800/6000

 

720/12

 

(Overhead-Depreciation)/12 Depreciation is not cash and must be removed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

4000

Cost

Depreciation

NBV

 

Current Asset

1900

2100

Depreciation = last years depreciation +(20% of 4000)

bank

 

Dr

2777

closing balance in cash flow from December

Current Liabilities

510

3287

510 ...