• BTEC Nationals Business
  • Unit 7: Management Accounting
  • Assessment criteria covered in this activity; P5. M3. D2

Scenario

The directors of The Bee honey Company have asked that you produce a budgetary report for the business, taking into account the provious sales figures that they have provided below. They would like you to assess the performance of the business in the previous year and also produce a budget for future years, taking into account various factors that could impact on future costs and revenue.

  • Average Selling Price per Unit; £2.49
  • Average Variable Cost per Unit; £0.89

Actual Sales data for the 2014 is included below;

Month Sales   (m)
Jan 0.6
Feb 1.4
Mar 2.8
Apr 3.2
May 3.8
Jun 4.05
Jul 6.15
Aug 7.35
Sept 10.5
Oct 6.25
Nov 6.25
Dec 3.36

Budgeted Sales data for the 2014 is included below;

Month Sales   (m)
Jan 0.4
Feb 1.2
Mar 2.1
Apr 3.5
May 4.2
Jun 3.5
Jul 6.00
Aug 7.80
Sept 9.5
Oct 6.8
Nov 6.8
Dec 3.4

Predicted / actual revenue data for the 2015 is included below;

Month Predicted Revenue  (m) Actual Revenue  (m)
Jan 3.4 3.1
Feb 3.6 3.5
Mar 3.8 3.7
Apr 4.0 3.9
May 4.1 4.1
Jun 4.3 4.2
Jul 5.5 5
Aug 5.5 5.6
Sept 4.9 5
Oct 4.5 4.7
Nov 4.3 4.5
Dec 4.1 4.2

Predicted / actual costs data for the 2015 is included below;

Month Predicted Costs  (m) Actual Costs  (m)
Jan 1.3 1.8
Feb 1.6 2.3
Mar 1.8 2.5
Apr 2.0 1.9
May 2.1 2
Jun 2.3 2.1
Jul 3.5 3
Aug 3.5 2.8
Sept 2.9 0.9
Oct 2.5 1.5
Nov 2.3 1.9
Dec 1.9 2

Suggested Content

Your report should include the following;

  • Produce a description of the importance of budgeting and how it can be used to set targets. Explain the importance of monitoring budgets and how variances can be used to inform performance.
  • Produce a budget with variances for the year of 2014. Comment on variances and the performance of the business over the last year. Assess the reasons that could have led about these variances occuring?  
  • Produce a budget for 2015, calculating the possible variances for costs, revenue and profit.
  • Analyse the impact that changing costs have had on the variances? Produce suggestions that the business should adopt to improve performance and reduce any adverse variances.
  • Using the budget data and your statisitical analysis skills, produce a future budget for the business in the year 2016.

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