1 / 5

Overall method

Overall method. Rigorous procedures for reporting and monitoring Set up a complete Budget framework Budget broken down per responsibility - e.g. buyers give prices, production gives productivity once a year = > budget put together expected levels are put proposed by each area

will
Download Presentation

Overall method

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Overall method • Rigorous procedures for reporting and monitoring • Set up a complete Budget framework • Budget broken down per responsibility - e.g. buyers give prices, production gives productivity • once a year = > budget put together • expected levels are put proposed by each area • full report compiled (p/l for the year ahead) • negotiated with top management • final budget • used to measure up everything that happens

  2. General Indicators - monitoring the business • Focus on 3 key indicators compared with budget makes it easier to analyse responsibilities: • volume V (Vb for budget and Va for actuals) • price P • formula F • total variance = Va Pa Fa - Vb Pb Fb • volume variance = Va Pb Fb - Vb Pb Fb = (Va-Vb) Pb Fb • Price variance = Va Pa Fa - Va Pb Fa = (Pa - Pb) Va Fa • Formula variance = Va Pb Fa - Va Pb Fb = (Fa - Fb) Va Pb Applies to the cost side E.g. Pb Fb note that total = tot var

  3. Analysing the general indicators • Volume variance : • breakdown per product / market / week • also per rep? • source: budget / weekly sales • who? Sales Director and reps + regional supervisors + MD • colour maps showing areas / markets • threshold values determine colour • volume and £ figure

  4. Analysing the general indicators • Price variance: • breakdown per RM / component + labour (for each category) [focus on most expensive] • buyers / production director + supervisors +personnel director • source: budget figures + account payable / payroll • Monthly probably enough (changes don’t occur that often) • tables for detail + exception reporting using shape of RM that is causing the variance to be negative

  5. Analysing the general indicators • Formula variance: • per product / per RM + labout • source: stock out sheets + production sheets (sales too late) + personnel hours • some figures cannot be known exactly => use surrogate or estimate • target: foremen, production staff and director • gauges, colour map of the factory, colour coded £ signs

More Related