Accounting for Business 4BUS1043 Forecasting and Budgeting and Planning + Coursework Pre Lecture Slides

Lecture 3 Sem A3 Week Commencing 17th October

What we have learnt

Accounting Helps with Decision Making, Planning and Control The resources a business needs What are sales and what are costs. How break even analysis can help us.

Today we will learn about

Forecasts Budgets Business Plans Coursework

Business Scenarios & Time Horizons

Negotiating long term funding Working out next weeks bread requirements in a sandwich shop Ordering Christmas stock Designing an aero engine Finding a factory Negotiating annual contracts for raw materials Setting annual sales bonus targets Recruiting more retail managers Buying a contract for advertising space Ordering in-flight food by an airline

Order the above in terms of time horizon from shortest to longest

Time Horizons
SHORTER

LONGER

What information would be useful to a manager in each case?

Forecast which a short term prediction of trade (or other future outcome) Budget usually set annually for the forthcoming year Strategic Plan covering the next 5+ years Place the Business Scenarios which you have ordered by time horizon in the columns on the following slide

Forecast

Budget

Strategic Plan

Forecasting - Ordering in-flight food by an airline required information

Flight details e.g. times Passenger numbers Staff numbers Split between economy, business and first class Dietary requirements

In Flight Catering Example

You have the following information. Calculate how many meals are requires and of which type.
3 flights 100, 150 and 230 passengers all economy 20 Staff 10% Vegetarian passengers 90% Non- vegetarian passengers

Answer ?

Budgeting - Recruiting more retail managers

Number of new outlets Mangers being promoted Managers leaving Percentage of managers who are recruited and who complete training

Recruiting managers - Relevant Data

10 new outlets 8 managers will be promoted 6 Managers will leave 75% of managers complete training

How many new managers should you budget to recruit?

Strategic Planning Finding a factory

Would include:
Long term production strategy Location of markets Location of resources employees, raw materials Development grants

Designing an aero engine . . . .

Usefulness of Forecasts
Use most recently available information Use most relevant information for the decision being made Can be prepared by the person best placed to estimate the short term future Are limited to resources which can be influenced in the short term

Usefulness of budgets
In general budgets are used for the following purposes:
To promote forward thinking and identify short term problems To facilitate coordination among various sections of an organisation To motivate managers to better performance To provide a basis for control To provide a system of authorisation for managers to spend up to a particular limit

Effective budgetary control

Budgets are prepared to affect the attitudes and behaviours of managers and to provide direction for managerial decision making To make full use of the budgets potential for control the following conditions should be met: Senior managers should adopt a serious attitude to the system There should be clear distinction of responsibilities Budget targets should be challenging but realistic There should be well established data collection, analysis, and reporting routines Reports should be case (manager) specific Reasonably short reporting periods should be adopted Variance reports should be available to managers within short time Timely action should be taken in order to bring activities under control

Coursework Presentation Evaluation of a business scenario

Our assignment
You are an external consultant to a restaurant owner and you need to prepare a report to help him with:
Decision Making Planning Control

What should be covered on your report?

1. 2. The benefits to a business of using accounting techniques Description of the business from an accounting perspective Description, illustration and benefits of accounting technique which will you recommend will help with: Decision Making e.g. What price should be charged for daily lunch specials? Planning e.g. What is an annual budget and how will it help? Control e.g. What information should be reviewed regularly? Limitations to your recommendations

3.
4. 5. 6.

4BUS1043 Accounting for Business - Assessment and Grading Criteria

Marks Criteria

A grade (70%+) Excellent explanation of the advantages of using accounting techniques as means to aiding a business with decision making, planning and control. Explanation backed with wide use of relevant theory. Excellent description of the business model in terms of sales, variable costs, fixed costs, and capital requirements. Provision of relevant examples of types of costs being considered. Excellent a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its decision making.

B grade (60% - 69%) Very good explanation of the advantages of using accounting techniques as means to aiding a business with decision making, planning and control Very good use of relevant theory. Very good description of the business model in terms of sales, variable costs, fixed costs, and capital requirements. Provision of some examples of types of costs being considered. Very good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its decision making.

C grade (50% - 59%) Demonstrates a good understanding of the advantages of using accounting techniques as means to aiding a business with decision making, planning and control with reasonable discussion of theory. Good description of the business model and provision of examples of costs.

D grade (40% - 49%) Adopts a descriptive approach to the material with limited use of relevant theory.

Fail Demonstrates little or no understanding of material.

Introduction; To include the benefits to a business of using accounting techniques

10%

Description of the business from an accounting perspective

10%

Description of the business model showing limited understanding and limited use of examples of costs.

Demonstrates little or no understanding of the nature of costs.

Description, illustration and benefits of accounting techniques which you recommend will help with decision making

20%

Good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its decision making.

Demonstrates an attempt to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with its decision making

Very little or no attempt to to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with its decision making

Description, illustration and benefits of accounting techniques which you recommend will help with planning

20%

Excellent a) description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its planning.

Very good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its planning.

Good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with its planning.

Demonstrates an attempt to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with its planning.

Very little or no attempt to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with its planning.

Description, illustration and benefits of accounting techniques which you recommend will help with control

20%

Excellent a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with control.

Very good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with control.

Good a)description of and b)illustration of the benefits of appropriate accounting techniques which will help the business with control.

Demonstrates an attempt to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with control.

Very little or no attempt to to describe and to illustrate the benefits of appropriate accounting techniques which will help the business with control.

Conclusion: To include limitations to your recommendations

10%

Excellent evaluation of the role, importance, and limitations of accounting techniques in helping with the decision making planning and control in a business. Excellent use of relevant theory. Excellent grammar, presentation & report structure, with numbered paragraphs, list of contents &appendices. Articulate & fluent academic writing style with ideas cross referenced. No significant grammatical / spelling errors.

Very good evaluation of the role, importance, and limitations of accounting techniques in helping with the decision making planning and control in a business. Very good use of relevant theory. Very good grammar, presentation & report structure, with numbered paragraphs, list of contents &appendices. Fluent academic writing style. Very few grammatical errors & spelling mistakes.

Good evaluation of the role, importance, and limitations of accounting techniques in helping with the decision making planning and control in a business. Good use of relevant theory. Good, clear presentation & report structure, use of numbering & appendices. Writing is mainly clear but some spelling &/ or grammatical errors.

Attempts to present and discuss the role, importance, and limitations of accounting techniques in helping with the decision making planning and control. Weaknesses may exist in using theoretical concepts. Satisfactory but basic report structure. Not always written clearly & has grammatical & / or spelling errors.

Demonstrates little or no understanding of material.

Structure and Presentation

10%

Weak report format with limited or poor structure. Muddled work with many spelling & / or grammatical errors.

When are you going to submit your report?

Assignment due 21st November How to submit it?
One electronic copy via studynet

How to be successful?
Study smart or hard (the choice is yours ), ask questions, and follow the guidance below

You will be assessed on:

Coverage and application of relevant theory Explaining, illustrating and describing benefits of techniques Evidence of reading and research (including sourcing and referencing using the Harvard referencing system throughout, accompanied by a bibliography) Overall structure and presentation of report (including requirements listed below)

Use of language when writing a report

A report should be written concisely in a business like manner Headings and subheadings needed to effectively present your views Use of third person is recommended, avoid I... or we... Use plain English, avoid words you dont understand Avoid long, complicated sentences, as it makes it easy to miss the point you are trying to make Make sure you develop a new point using a new paragraph Make sure you support your views using references

Layout of your assignment

The assignment should be in report format Use proper headings/subheadings, an easy way to work around it is to use each issue you need to address as a separate heading You should use 1.5 or double line spacing and font size no less than 12 Your word count is 1,200 words excluding any graphs, tables, calculations, appendixes, and your reference list You should display you full name, your ID number, the name of the module, and the word count on the FRONT page of the report

Assignment Support
Academic Skills Unit On studynet: Click on Student support and scroll down
How to write a report Harvard Referencing

Further Support
Learning Resources on the Studynet Homepage e.g. How to read an academic journal Academic Skills Unit Office Hours Tutorial week commencing 31st October after the In-class test Drop-in workshop

In big writing!
Direct quotations must be very brief Wikipedia and open access sites are not an acceptable academic source We will be using Turnitin Do not cut and paste chunks of text, copy or cheat in any other way!

Tutorial Preparation
1. You are manager of a DIY store. You need to forecast your sales for the coming Easter weekend. Easter was at a different time last year. What information will help you to produce an accurate figure? Prepare a six- month budget See studynet Critically discuss these statements, explaining any technical terms.
a) b) c) A budget is a forecast of what is expected to happen in a business during the next year. Monthly budgets must be prepared with a column for each month so that you can see the whole year at a glance, month by month. Budgets are OK but they stifle all initiative. No manager worth employing would work for a business that seeks to control through budgets.

2. 3.

Preparation for Next Week

Controlling and Comparing Essential Reading: Burgess Chapter 6 Pages 105-116, Atrill & McLaney Chapter 9 Page 280-288, 298-299, 312-319 Additional Reading: Remainder of Burgess Chapter 6 & Atrill & McLaney Chapter 9