An Advanced Planning Tool for Business Management - Assignment Example

JBS Report by Information Breakdown b) c) d) e) f) g) Question Question 2 Income ment for JBS For the Year Ending Dec 31, 2012 Revenue Fees Management Programme $ 1,000,000.00 Scholarship $ (100,000.00) $ 900,000.00 Marketing Programme $ 750,000.00 Scholarship $ (75,000.00) $ 675,000.00 Finance Programme $ 1,000,000.00 Scholarship $ (100,000.00) $ 900,000.00 Canteen $ 100,000.00 Special Orders $ 20,000.00 Photocopying $ 200,000.00 $ 320,000.00 Miscellaneous Management Programme $ 2,500.00 Finance Programme $ 1,250.00 Marketing Programme $ 250.00 $ 4,000.00 Total Revenue $ 2,799,000.00 Expense Faculty Members $ 360,000.00 $ 360,000.00 Rent $ 200,000.00 Other cost Director of School $ 50,000.00 Programme managers $ 120,000.00 $ 170,000.00 Programmer Admin Cost Management Programme $ 20,000.00 Finance Programme $ 20,000.00 Marketing Programme $ 20,000.00 General Admin Cost $ 25,000.00 Library $ 50,000.00 Cleaning and Maintenance $ 60,000.00 $ 195,000.00 Total Expense $ 925,000.00 Net Income $ 1,874,000.00 Question 3 Assuming that JBS recruits 10 more students in the marketing programme, the total number of students will rise to 1010, while in the faculty the new statistics will be 260 students. The total revenue that JBS will get from the marketing program will increase from SGD$675000 to SGD$705000. The special offers and photocopying revenue will rise to SGD$20200 and SGD$202000 respectively. The part-time staff will also be paid SGD$15000, thereby increasing the institution’s expenses. The apportionment in the miscellaneous revenue will also be affected. Recruiting 10 more students will have a positive contribution on the institution because the net income will increase from SGD$1874000 to SGD$1891170. The changes are as shown in the income statement. Income Statement for JBS For the Year Ending Dec 31, 2012 Revenue Fees Management Programme $ 1,000,000.00 Scholarship $ (100,000.00) $ 900,000.00 Marketing Programme $ 750,000.00 Scholarship $ (75,000.00) $ 675,000.00 Additional Students $ 30,000.00 Finance Programme $ 1,000,000.00 Scholarship $ (100,000.00) $ 900,000.00 Canteen $ 100,000.00 Special Orders $ 20,200.00 Photocopying $ 202,000.00 $ 322,200.00 Miscellaneous Management Programme $ 2,475.25 Finance Programme $ 1,237.62 Marketing Programme $ 257.43 $ 3,970.30 Total Revenue $ 2,831,170.30 Expense Faculty Members $ 360,000.00 $ 360,000.00 Part-time Staff $ 15,000.00 Rent $ 200,000.00 Other cost Director of School $ 50,000.00 Programme managers $ 120,000.00 $ 170,000.00 Programmer Admin Cost Management Programme $ 20,000.00 Finance Programme $ 20,000.00 Marketing Programme $ 20,000.00 General Admin Cost $ 25,000.00 Library $ 50,000.00 Cleaning and Maintenance $ 60,000.00 $ 195,000.00 Total Expense $ 940,000.00 Net Income $ 1,891,170.30 Question 4 Assuming that JBS reduced its course fee by 10 per cent, the management programme fee will be, marketing fee will be, while the finance fee will be. The fee revenue generated from the management programme fee will be , marketing fee will be , while the finance fee will be . The impact of cutting fee by 10% will reduce the net income to SGD$1,628,670.30 as shown in the income statement below Income Statement for JBS For the Year Ending Dec 31, 2012 Revenue Fees Management Programme $ 900,000.00 Scholarship $ (90,000.00) $ 810,000.00 Marketing Programme $ 675,000.00 Scholarship $ (67,500.00) $ 607,500.00 Finance Programme $ 900,000.00 Scholarship $ (90,000.00) $ 810,000.00 Canteen $ 100,000.00 Special Orders $ 20,200.00 Photocopying $ 202,000.00 $ 322,200.00 Miscellaneous Management Programme $ 2,475.25 Finance Programme $ 1,237.62 Marketing Programme $ 257.43 $ 3,970.30 Total Revenue $ 2,553,670.30 Expense Faculty Members $ 360,000.00 $ 360,000.00 Rent $ 200,000.00 Other cost Director of School $ 50,000.00 Programme managers $ 120,000.00 $ 170,000.00 Programmer Admin Cost Management Programme $ 20,000.00 Finance Programme $ 20,000.00 Marketing Programme $ 20,000.00 General Admin Cost $ 25,000.00 Library $ 50,000.00 Cleaning and Maintenance $ 60,000.00 $ 195,000.00 Total Expense $ 925,000.00 Net Income $ 1,628,670.30 Question 5 When calculating the BEP for JBS, there is a challenge of classifying costs. It is very difficult to divide the costs categories as either a variable or a fixed cost. Consequently, the variable cost does not change proportionally to JBS revenue at each activity level. For instance, the revenues gotten from fee might change if the recruitment of students is changed. It is also difficult to categorize the faculty member as variable costs because there is high possibility of recruiting part-time staff. Consequently, there is a challenge attached to the time. Determining the time over which the variable and fixed cost relationship holds the status of the company is difficult to find out. Over a short time, the costs are viewed as fixed, but in the end, some of costs considered as fixed are now variable. Question 6 To evaluate the progress of JBS towards its mission, will use performance indicators and measures. The company will use the balance sheet, income statement, profit and loss account, and cash inflows of the previous year’s result to measure its performance. The data will be extracted from the relevance sources and then converted to financial ratios. This analysis involves incorporating both the financial and non-financial information into the evaluation. Additionally, the evaluation will seek the help of scorecard and benchmarking indicators. In Benchmarking, the institution will incorporate the comparative data in measuring the performance. The method takes the internal form where comparisons are done between various units within the institution. The technique will also take the functional form, where comparisons are conducted with the trusted external practitioner despite the market. Additionally, the institution will take the competitive form where the comparisons are conducted with the competitors of the institutions. Consequently, benchmarking indicators takes the strategic action and make changes in the institution. Another indicator is the balanced scorecard. The indicator links the objective of the institution with its performance. The indicator has customer, internal business, innovation, and learning, and financial perspectives linked to it. The perspectives are then linked to their respective objectives in terms of their measures. The advantage of this indicator is that it is flexible and can be assimilated to the circumstance of the institutions. The perspective increases the initiatives and targets that are measured thereby leading to information overload. Question 7 There are problems that will be encountered in trying to introduce the performance measurement system in the institution. Some of the attempts to embed the performance measurement system within the institution will be unsuccessful. The failure is caused by using many measures making the performance measurement system to be unwieldy and complicated. Additionally, there is problem of coming up with a tradeoff decision that exists between various dimensions. This happens because there is no clear direction. Assuming that the institution has limited budget, it will be forced to decide on whether to invest in training their employees or innovating their services. Assuming the two options add value to the institution, the management will have hard time in choosing the optimal choice for the institution. Reference Vera, R. (2009). The MAV income statement graph: an advanced planning tool for business management (5th ed.). San Antonio, TX: MAV]. Read More