In this case, a budget is a financial preparation that covers a specific period of business operations (Berry et. al. 2006). The budget usually shows different expectations of expenditure and revenues of a business. Under normal circumstances, a large organization creates departmental budgets while small organizations create a single budget for the whole firm. The comparison between the budget estimates and the end results of all business operations gives the management a variance. There are two main causes of variances in a business’s budget. One of the main causes is spending more than the budget allows. This could be due to the fact that the management budgeted for less than required; there was mismanagement of funds or general poor planning. Secondly, there may be an unexpected emergency in a business that may cause a major drift in the use of funds from the budget (Berry et. al. 2006). Mechanical damages to a major processing asset for instance could lead to an urgent purchase of another one in order to maintain the expected level of production. As an example, the Manchester Meerkat Company (MMC) suffered a blow when floods drained the fibre filling. This caused an emergency spending that may have resulted to variance in the budget. This would cause destabilization in the budget hence a variance. These variances can either cause adverse effects to an organization if ignored or lead to success in business if noted and improved. This is because there exists two categories of variances namely favorable and unfavorable variances. The favorable variances occur where the results of business operations are better as compared to the expected results. On the other hand, the unfavorable variances occur whenever the end results of business operations are worse than expected results. Therefore, managers always carry out variance analysis in order to look-after-the fact at what caused the difference. Furthermore, according to Blocher & Cokins (2005) this analysis helps the management to pinpoint the effects the variances have to the business and how to correct or improve on them. The identification and isolation of the variance by the managers of an organization is crucial because diverse causes will dictate different remedies or opportunities. Furthermore, the causes of variance fall under the controllable and the uncontrollable categories. The controllable factors are changeable by the management. Poor planning and labor costs for instance are controllable factors where the management can correct by use of better planning and monitoring methods. On the other hand, there are other external factors that are uncontrollable. These factors are determined by outside entities of an organization. An increase in utility prices and/or an increase in the cost of raw materials for example are uncontrollable factors that may cause variance (Clinton, Matuszewski & Tidrick 2011). In all business organizations, there are people in the management who are responsible for various operations. The operations may be delegated to the relevant departments in order to ensure a smooth running of the business. In our MMC case, the direct materials price variance is placed under the sales manager. The reason is that the manager determines the prices paid for goods, the quantity in units ordered, the delivery price conditions and the quality of the purchased materials. Therefore,
CASE STUDY: MANCHESTER MEERKAT COMPANY Name Tutor Course Date Case Study: Manchester Meerkat Company The main objectives of any business are to create profits, minimization of costs of production and stability that ensures continuation of operations. However, these objectives are faced by various challenges in the dynamic business world…
It also reflects the issues related to the currency exchange between the Green Hardwood Corporation and its suppliers. The report will provide a structure which will help the company to manage the operational risk in future. Green Hardwood Corporation (GHC) is a multinational company manufacturing decorative hardwoods including two main divisions i.e.
“The acquisition of Woolworth by Paternoster made ways for a fairly small chain consisting of home development stores, known as B&Q. This was the commencement of decade comprising of chief expansions that led to one of the widest retail conglomerates of Europe.
PD: the companys Preferred Stock Dividends 2. RP: the companys Expected Redemption of the Preferred Stock 3. RD: the company’s Expected Redemption of Debt 4. E: Expenditures for sustaining cash flows Dividend valuation model assuming a dividend cover of 2, a constant dividend in perpetuity and a cost of capital of 20% Triumph plc ?
Secondly, the fact that the enhanced disclosure is as well not enough and finally, there is the objective of realizing an improvement in the quality and the comparability of the financial reporting. During the analysis of the lessee’s financial position, it is evident that many users tend to want to capitalize operating leases through adjustments made to the reported financial information.
As put into words by Lee (1996, p32-37):
The earnings that are reflected in a company's financial statements are considered to be the most important evaluator of a company's stock. The companies tend to report enhanced earnings every year so as to assure the shareholders of their performance and profitability.
IHG has been in business for nearly 3 decades and the management believes in steady growth and aims at 8% to 10% annual revenue growth in the long term.
However, the company is now presented with a prospective opportunity to invest in
The next section will deal with the same.
Michael Porter has devised a framework which provides a better understanding of the industry and how companies can be affected by forces within the markets. The
The chain of Comet electrical was bought by the company in 1984 followed by buying stores of Superdrug health and beauty in 1987”. (Kingfisher, 2011)
In the meantime, B&Q was expanding its out of town appearance in order to become the leader of home
Initially, the company started to offer DVDs on rents and the company used to charge $4 rental fee and $2 postage fee for each movie by their customers. After watching the DVD, the customer then mailed it back to the
The Munich disaster of 1978 was a low point for the club, with speculation that it marked the end for Manchester United. Under Matt Busby’s leadership, the club was able to rise up and dominate the English premier league
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