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Classmate A

A. Flexible Budget and Standard Costs

In the business, monetary or physical units are considered as the preparation of budgets in terms of financial acumen. Here, in a specified period budget analysis can be represented in the activity of future plans for more growth and productivity. In the types of investments, we can easily allow most usable budgets with their implementation as the basic elements of the budget. With the standard cost analysis, it can be considered as a monetary plan with its expenses and returns. For the sources based on the changes a flexible budget is taken to take right direction. However, the usage of money can be described in the company for the changes in the volume of activity.

On paper presentation, we can utilize these resources about the huge amount of information. In situation changing to keep the account flexible budget analysis to be more sophisticated over the format. In the static budget analysis with the economy of nations can change to the reasons that can adjust the format of the budget. In the flexible budget to the changes in the factors, the static budget can be considered with the government. With the flexible budget, it has the flexes for this as a matter of course in their daily life. In order to get clearance one of the changes has been made as a fixed budget in which it remains the same. Moreover, it has to use a static budget based on the budget with the help of these dynamic or changing budgets.

Due to increased or decreased sales in the business plans people prefer about the cost with sales amount and volume. In which whose incomes are not standard with the other materials, we have to control some cost flow. It has to allow finances on the laborers more useful to the people and companies in which are using unnecessary in the company. In most of the cases, flexible budgets are one size fits all settle down the other deficits (Bian, 2019).

As a manager, I have chosen a flexible quote budget for a static budget, the analysis of the statistical budget analysis is essential for the organization. In the flexible budget analysis, flexible operating budgets are used to make flexible quotes, based on the results of this performance based on regular budgets and actual reports. This type of technique is budget-related expenses that are similar to the actual performance of the company. For example, when XYZ has established a flexible flexibility technique, it should be less than 35% of the goods sold, and the previous real sales would be $ 1,000,000. The real price of $ 3,500,000 and the goods sold were $ 360000. This accounting information is the result of the Department's accounting department budgets. (Ardagna,D. 2011)

To find the standard of cost variance, at standard cost and at real cost, I have found the cost of organizational decision making based on negative awareness. In this case, the standard cost of labour is based on the duration and movements adapted to the duration. In some cases, this view cannot be used if the base is not valid.

The static budget is a continuous planning and a mandatory first budget, which is not changing. At the beginning of the preparation of budgets, the static budgets will be prepared and it will be final. The next plan for budget planning is flexible, it can be adjustable. In order to achieve flexible planning, we must take care of it carefully; Due to the company's profits, it is based on a flexible budget based on profitability. Most manufacturing companies are flexible budgets and flexible budgets are flexible budgets. An example of a static budget is 4-day work and costs per month can be around 100 units; so the cost of four months will be 400 units and it means static budgets. Flexible budgets vary according to the needs and activity. In the first month, the flexible budget can be around 100 units and can be lower than the first month of the month because it is constant.

Variations are also used to motivate the performance assessment and managers. Maytag's production line managers can have quarter-efficiency incentives to get a quote for operating costs. Sometimes, the change suggests that the company must consider a strategy change. For example, negative changes caused by excessive defects in a new product may have a bad product design. The directors want to analyse the product design and want to mix their products. (Dyckman, T (1969))

With the help of dynamic or variable budgets, we have to control the cost of business and other business materials. Flexible budgets are very useful for non-standard people. This is not the way to adjust the size of non-financial size and show flexible budgets. (Heckert，J． (1967))

Reference

Ardagna, D., Baresi, L., Comai, S., Comuzzi, M., & Pernici, B. (2011). A service-based framework for flexible business processes. IEEE software, 28(2), 61-67.

Dyckman, T, “The　Analysis　of　Cost　Variances "journal of Accounting Research,7(2), Fall 1969, PP. 215-244

Heckert，J．and　J，Wi1son，Business Budgeting and control，3rd　ed,New York：The Rona1d　Press，1967．

Classmate B

1. Capital budgeting is the process a company uses to determine which fixed asset purchases to accept and which to reject. This process is used to create a quantitative view of each proposed investment in fixed assets, providing a rational basis for making a judgment. Capital budgeting is important because it creates accountability and measurability. Any company that seeks to invest its resources in a project without understanding the risks and benefits involved would be considered irresponsible by its owners or shareholders.

While using capital budgeting, manager would first identify the need or opportunity. It is the result of a shared vision of the objectives and strategies of the company, together with a perspective of the needs, tastes and behavior of “local” customers. They see a need or opportunity and communicate it to top management. This is usually done in the form of proposals, which include both Identification of the need or opportunity, Possible solutions and / or recommendations.

While identifying project needs is often a decentralized function, startup and capital allocation decisions tend to remain a highly centralized undertaking. The reason for this revolves around the need to ration capital. This is particularly true when funds are limited, and top management wishes to maximize their returns / benefits from any capital project undertaken. The information needed to make this determination generally comes from internal and external sources. It is also based on financial and non-financial considerations. Interestingly, the factors examined in this process can be both company-specific and market-based.

2. A flexible budget allows a business to see more variations than a static budget. Static budgeting involves using assumptions and predictions about sales, market, economic conditions, and other factors that impact a business before the budget period begins; these assumptions may not be correct. Flexible budget information is based on actual results, allowing the company to adjust the static budget for precision and compare results. The company compares the actual line-by-line costs and profits from the flexible budget to the estimates made in the static budget. Variation information, such as the difference between estimated and actual sales and estimated and actual operating costs, helps the company improve efficiency and identify problem areas.

3. Manager gain insight into the causes of flexible-budget variances for direct materials, labor, and overhead that A manager must subdivide the flexible budget variance for direct materials into a price variance (which reflects the difference between the actual and budgeted price of direct materials) and an efficiency variance (which reflects the difference between the actual and budgeted quantities of direct materials used to produce actual output). The individual causes of these variations can be investigated, recognizing the possible interdependencies between individual cases.

For example, a flexible budget model is designed where the price per unit is expected to be $100. In the most recent month, 800 units are sold and the actual price per unit sold is $102. This means there is a favorable flexible budget variance related to revenue of $1,600 (calculated as 800 units x $2 per unit). In addition, the model contains an assumption that the cost of goods sold per unit will be $45. In the month, the actual cost per unit turns out to be $50. This means there is an unfavorable flexible budget variance related to the cost of goods sold of $4,000 (calculated as 800 units x $5 per unit). In aggregate, this works out to an unfavorable variance of $2,400.

References:

Peterson, P. P., & Fabozzi, F. J. (2002). Capital budgeting: theory and practice (Vol. 10). John Wiley & Sons.

Jordan, W. C., & Graves, S. C. (1995). Principles on the benefits of manufacturing process flexibility. Management science, 41(4), 577-594.

Poterba, J. M. (1995). Capital budgets, borrowing rules, and state capital spending. Journal of public Economics, 56(2), 165-187.

Classmate C

1.

Every company wants to increase companies' sales, and they have to make some budget plans for it. Budget for every company is essential because a budget is a statement prepared by the manager for better functioning of all business activities. In so many types, a budget is designed according to department activities, which is helpful in decision making. Capital budgeting is very effective for the organization. It is like a financial statement that provides much relevant information about the sales or cost. Capital budgeting is very effective for long-term business. It is beneficial in some vital projects to achieve the objectives of a business. And operating budget is very helpful in the business day to day activities, which helps run the business effectively. It is beneficial in generating more profits for business because every work done according to budget. (Justice & Yeboah, 2020)

Variance analysis refers to the study of facts or reports in comparison to the predicted or planned budget. With the help of variance analysis, we get different results or outcomes. It is beneficial in determining cost and getting different results with its use, making effective decisions. With the help of variance analysis, organizations know about the differences in prices and decide which is profitable for business. It helps in achieving the target of interaction with other research and quickly achieving the business's objective.

2. Flexible Budget is More Informative

A flexible budget is more informative than a static budget; it helps a company check more variances than a static budget. A static budget is based on estimation or prediction about sales or market condition; it affects business before the budget period starts but may be correct or not because it is based on analysis. Flexible budgets provide accurate information about actual data that help check the accuracy of static allocation and quickly compare the results or outcomes (Mannes, Frare, & Beuren, 2021).

3.

In an organization, managers play an essential role, and they take all responsibility to run a business effectively. They make a proper budget plan to run the business smoothly. A short-term budget is flexible, which helps in analyzing the performance of the company. With the help of a flexible budget, the cost is estimated easily. A flexible budget is beneficial in calculating the business's revenue, and it helps in the company's growth. A manager must determine the variances to reach a proper or actual conclusion (Justice & Yeboah, 2020). A flexible budget allows calculate the actual or estimated cost, and it is constructive in generating revenue for the business (Hoque & Ulku, 2017).

For example, a company, ABC, wants to estimate its sale of the future, which can be counted if they calculate the variance or difference in advance (Geiszler, Baker, & Lippitt, 2017). Direct labor cost is $42,000, equipment cost is $55,000, and overhead cost is $ 32,000 if they get the estimated cost $129,000. The total or actual cost is $135,000, then their no variance or difference found.

References

Geiszler, M., Baker, K., & Lippitt, J. (2017). Variable Activity-Based Costing and Decision Making. Journal of Corporate Accounting & Finance, 28(5). doi:10.1002/jcaf.22277

Hoque, M. Z., & Ulku, N. (2017). Mental budgeting and the financial management of small and medium entrepreneurs. Cogent Economics & Finance, 5(1). doi:10.1080/23322039.2017.1291474

Justice, A., & Yeboah, E. N. (2020). Capital Budgeting as a Tool of Management Decision Making: A Case Study of National Investment Bank Limited. Research Journal of Finance and Accounting, 11(4). doi:10.7176/RJFA/11-4-04

Mannes, S., Frare, A. B., & Beuren, I. M. (2021). Effects of using static and flexible budgets on process and product innovation. Revista de Contabilidade e Organizações , 15(1). doi:10.11606/issn.1982-6486.rco.2021.180829