Sales, Expense & Performance Budgeting

The assignment delves into different budgeting methodologies used by businesses. It examines forecast budgeting, encompassing sales and expense budgets, and highlights the significance of performance budgeting for monitoring an entity's financial health and operational efficiency. The analysis emphasizes the role of cost control and planning strategies in achieving desired outcomes.

MPA

TABLE OF CONTENTS
Company background................................................................................................................1
Cost Information analysis..........................................................................................................2
Cost reduction and value added.................................................................................................4
Forecasts and budgets................................................................................................................4
Monitor Performance.................................................................................................................7
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

COMPANY BACKGROUND
Woolworth is large scale supermarket based in Australia operated in a retail sector by
offering variety of goods to seal the attention of its most of the users. This grocery chain has
founded by Woolworth Limited in 1924 in Bella Vista New South Wales. The grocery stores
have 992 stores located all across the world to capture the whole world. Various products
available in the grocery stores Woolworth Ltd include Vegetables, fruits, poultry products
and packaged products (Woolworth, 2017). Customers like to visit this place as the current
saves the time of the client by purchasing all the stuff available under same roof. Other than
grocery items other stuff available at this store includes entertainment items, magazines,
health and wellness products, household products, pet and baby products and stationery
items. Due to the variety of ranges of products available in the store of an entity helps in
targeting different age group people such as infant, teenager, adult and old age people. A
person can purchase the products from this store by visiting the retail store as well as
purchasing from the online store (Durojaiye, Bell Gorrod, Andrews, Ntziora, and Cartwright,
2017). Through E- commerce website of the firm a customer can purchase the goods from
anywhere and anytime according to its availability.
Initial name of this store in 1924 was Wall worth bazaar Ltd which further changed to
Woolworth Ltd Supermarket that includes all the goods available in this market to meet the
desired needs of all the users (Winkler, 2017). Fresh and food people campaign has organised
by the firm o deliver quality oriented services to its variety of users by emphasizes on the
freshness of the products as health of the customers gets affected by eating fresh or stale
food. Slogan of the supermarket was Australian fresh food people that catch the attention of
most of the users towards this store as everyone wants to visits the store to explore different
varieties of stuff available in the same roof.
1

COST INFORMATION ANALYSIS
Cost is regarded as one of the important factor for an entity that helps in achieving
desired aims and targets of an entity in a given span of time (Conen, Matter-Walstra,
Schädelin, Mariani and Hess, 2017). The information of cost can be generated from the
financial statements of the business concern as ascertaining costs is regarded as the most
important procedure in ensuring the longer survival of the firm by beating all its competitors
in the external business environment (Webb and et. al., 2017). Important role played by a
cost accountant is to ascertain all kinds of cost incurred in an entity as determining all kinds
of costs is suitable for the firm. Analyzing the risks at the initial stage is beneficial for the
firm like Woolworth in managing all the risks by increasing different sources of income
generated by the firm.
Particular Year1 Year2 Year3 Year4 Year5
Units sold 8000 10000 12000 14000 16000
Sales 280000 400000 480000 560000 640000
Less variable cost
Opening inventory 0 28000 93000 72000 40000
Production 224000 310000 432000 560000 704000
Closing inventory 28000 93000 72000 40000 132000
Variable selling 21000 28000 35000 42000 49000
Variable overhead 14000 21000 28000 28000 35000
Contribution -7000 -80000 -180000 -182000 -320000
Less Fixed cost
Fixed manufacturing 80000 80000 80000 80000 80000
Loss -87000 -160000 -260000 -262000 -400000
SP 40
Units produced 8000
Particular Year1 Year2 Year3 Year4 Year5
Direct Material 8 9 11 13 15
Direct labor 5 5 6 7 7
Variable Overhead 2 3 4 4 5
variable selling 3 4 5 6 7
Fixed manufacturing 10 10 10 10 10
Total production cost 28 31 36 40 44
Particulars 2013 2014 2015 2016 2017
Cost of revenue $42,913
$44,47
5
$60,86
8 $58,276
$55,66
9
2

Operating expenses $12,415
$12,94
5
$13,84
2 $14,271
$13,84
7
Interest $410 $278 $255 $520 $650
Provision for income tax $960 $1,057 $930
$450,00
0 $60
Program Total Costs By
Year $56,698
$58,75
5
$75,89
5
$523,06
7
$70,22
6
Program Grand Total
Cost
$784,64
1
Fiscal
Year
Benefit Sources 0 1 2 3 4 5
Revenues $58,674
$60,95
2
$60,86
8
$58,27
6
$55,66
9
Other income $278 $260 $281 $278 $244
Other income $5 $7 $9 $1,113 $60
Total Benefits Per Year $58,957
$61,21
9
$61,15
8
$59,66
7
$55,97
3 $0
Confidence Factor 100% 100% 100% 100% 100% 100%
Benefits Claimed for
Analysis $58,957
$61,21
9
$61,15
8
$59,66
7
$55,97
3 $0
Program Grand Total
Benefit
$296,97
4
Fiscal Year
0 1 2 3 4
Undiscounted Flows
Costs -$42,913 -$44,475 -$60,868 -$58,276 -$55,669
Benefits $58,674 $60,952 $60,868 $58,276 $55,669
Net Cash Flow $15,761 $16,477 $0 $0 $0
Discount Factors
Discount Rate 8.0%
Base Year 2013
Year Index 0 1 2 3 4
Discount Factor 1.0000 0.9259 0.8573 0.7938 0.7350
Discounted Flows
Costs -$42,913 -$41,181 -$52,184 -$46,261 -$40,918
Benefits $58,674 $56,437 $52,184 $46,261 $40,918
Net $15,761 $15,256 $0 $0 $0
Cumulative $15,761 $31,017 $31,017 $31,017 $31,017
3

Using different methods mentioned above, costs are ascertained by an entity by
evaluating the financial performance of an entity (Wong and et. al., 2017). Different kinds of
costs are evaluated by the Woolworth Ltd to ensure its survival in the external business
environment. Cost accountants will perform costs benefit analysis to determine the position f
the firm in the external environment as external market competition get eliminated by the
business by utilizing all its strengths and power.
Activity based responsibility accounting emphasises on ascertaining the financial
performances of an entity by keeping track of all the revenues and expenditures incurred in
an enterprise. Cost, revenues and profits are three important measures to test the financial
performance of an entity for a particular span of time. Three pillars of the responsibility
accounting include controllability, information vs. blame and motivation desired behaviour.
As a part of responsibility accounting, segmented reporting used by the managers in
collecting data regarding cost, revenue and profit to strengthen the financial performance of
the business concern.
Segment of the Woolworth
Particulars
Grocery
items
Frozen
foods
Clothing
wear
Fashion
accessories
Pharmace
utical
Sales Revenue 250000 50000 350000 120000 560000
Variable Operating Expenses
Sales Representatives 480000 24000 40000 50000 120000
Raw material Supplies 35000 12000 15000 12000 120000
Shelf 12000 2000 23000 23000 50000
Inventory management 5000 1000 20000 12000 5000
Petty 2000 500 5000 2000 200
Total 534000 39500 103000 99000 295200
Segment contribution
margin -284000 10500 247000 21000 264800
Less: Fixed expenses by
manager 20000 20000 20000 20000 20000
Profit margin by segment
manager -264000 -9500 227000 1000 244800
Less: Fixed expenses
traceable to segment 5000 5000 5000 5000 5000
Segment Profit margin -269000 -14500 222000 -4000 239800
Less: Common fixed
expenses 3000 3000 3000 3000 3000
Income before taxes -272000 -17500 219000 -7000 236800
Income taxes -54400 -3500 43800 -1400 47360
Net income -217600 -14000 175200 -5600 189440
4

Balance score card is an important tool used by an enterprise in evaluating the
performance of the firm by stressing on various aspects. This approach helps in analyzing the
performance of the business overall particular span of time as providing quality oriented
services to the customers is important for the business. It helps in analyzing financial as well
as non-financial performance of the firm in the external business environment. Financial
measures used by the firm to compare the current performance with the past results generated
by the firm in an enterprise. This technique focuses on identifying errors in financial as well
as non-monetary areas as these areas play an integral role in the success of the business
within a particular span of time. An entity uses balance scorecard to identify all the unique
traits and skills of the business concern to ensure longer survival of the enterprise. Future of
the firm depends on the accomplishment of various goals and the objectives within a shorter
span of time. Two important indicators used in this approach helps in achieving the desired
market aims and targets within a shorter span of time. Cost minimised by the fir to enhance
the quality of the services delivered by the entity in lesser time. Cost, quality and time are the
three pillars used as weapon against the competitors of the business in capturing higher
market share in the external entity.
Lead and lag indicators used as important tool in creating the balance scorecard by
considering all positive and negative aspects in increasing the productivity of the firm against
all its rivals operated in the similar industry.
5

Figure 1 Balanced Scorecard
Balanced Scorecard is compared with the vision of the business which will be
achieved in the uncertain future with the help of various missions. These four missions act as
a staircase to reach the final destination of the firm are Financial, Internal operations,
Learning and growth and Customers.
Strategic Priorities Aims Measures Targets Initiatives
Financial Financial
strategy
 Higher
grocery sales
by 50% in
2016
 Return on
capital
employed by
20%
 Utilization of
asset in
increasing
returns
 Cost
leadership by
ROCE
Ratio analysis
Horizontal
analysis of the
financial
statements
Eliminating
costs to
increase sales
and the
revenue
Cost
regulation
Higher
sales of
50% in
grocery
market
20% sales
growth of
Woolworth
Decreasing
cost by
25% at the
end of the
year
Higher
Recycling
of wet and
dry waste
to reduce
the overall
cost
incurred by
the firm
Monthly
revenue
evaluation
program to
keep track
on all the
6

offering
products and
services in
lower prices
as compared
to all the
competitors.
 Higher
Profitability
measures
Increasing
cash flow
Net profit
evaluation
Preparation of
costs
statements
Absorption
costing
statements
Segmental
reporting
current
ratio
earnings of
the business
Customer Customer
loyalty
Catching
the
attention
of the
customers
Extend the target
market of the firm
Using marketing
techniques to attract
large number of
customers
Questionnaires
distributed
among the
customers to
seek their
consent
Hoardings and
personal
selling used by
the firm
Attract 300
people by
the end of
quarter
Incur lesser
marketing
costs
Customer
loyalty club
Online
blogs
organised
by the firm
Learning
and
growth
Training
to
employees
Train all the regular
employees to fill the
potential vacancies
On the job
training
Internally
recruit
large
number of
employees
to higher
position
Promotion,
motivation,
awards and
recognition
program
Internal
operation
Logistics To provide free home
delivery all across the
world
Support of
voluntary
workers all
To deliver
500 people
all across
Giving
franchisee
to air lines
7

across the
world
the globe
COST REDUCTION AND VALUE ADDED
A cost is negative factor incurred in an entity which needs to be avoiding by applying
various cost reduction strategies (Web and et. al., 2017). Aim of the business while applying
cost reduction strategy is to reduce overall operational costs in an entity by increasing the
productivity of the firm. There are various cost reductions strategies that Woolworth may
follow is mention below:
 Business process improvement
 Safety performance
 Quality management technique
 Six sigma
Activity based costing is an approach used by an entity in allocating al the cost incurred
in a business on a different kinds of activities takes places in an entity. Resources available I
the firm is assign to all the departments on the basis of overhead rates.
Grocery store Clothing wear
Unit level activities 50 500
Batch level activities 5 10
Product level activities 2 2
Facility level activities 2 3
Goods Manufactured 5000 10000
Overhead costs
Unit level activities $60,000
Batch level activities $120,000
Product level activities $70,000
Facility level activities $125,000
Total overhead cost $375,000
TotalTotal Plant Activities Grocery store Clothing wear
Unit level activities 18,750,000 - 18,750,000
Batch level activities 1,875,000 - 1,875,000
8

Product level activities 750,000 - 750,000
Facility level activities 750,000 - 750,000
Calculation of Rates
Overhead costs Cost Rate
Unit level activities $60,000 0.0032
Batch level activities $120,000 0.064
Product level activities $70,000 0.093333333
Facility level activities $125,000 0.166666667
Total overhead cost $375,000
Overhead per unit Standard Deluxe
Unit level activities 0.16 1.6
Batch level activities 0.32 0.64
Product level activities 0.186666667 0.186666667
Facility level activities 0.333333333 0.5
Total overhead cost 51.31648936 2.926666667
FORECASTS AND BUDGETS
Sales budget
Particul
ars
Year
1
Year
2
Year
3
Year
4
Year
5 Year6 Year7 Year8 Year9
Year
10
Sales
units 2000 2200 2420 2662
2928.
2
3221.
02
3543.
12
3897.
43
4287.
18
4715.
9
Unit 60 60 60 60 60 60 60 60 60 60
Sales
1200
00
1320
00
1452
00
1597
20
1756
92
19326
1
21258
7
23384
6
25723
1
2829
54
Expenses budget
Particulars
Cost
per
unit
Ye
ar1
Ye
ar2
Ye
ar3
Yea
r4
Year
5
Year
6
Year
7
Year
8
Year
9
Year
10
Quantity produced
20
00
22
00
24
20
266
2
2928
.2
3221
.02
3543
.12
3897
.43
4287
.18
4715
.9
Variable cost
Advertisin
g 5
10
00
0
11
00
0
12
10
0
133
10
1464
1
1610
5.1
1771
5.6
1948
7.2
2143
5.9
1886
3.6
Direct
material 4
80
00
88
00
96
80
106
48
1171
2.8
1288
4.1
1417
2.5
1558
9.7
1714
8.7
1886
3.6
labor 3 60 66 72 798 8784 9663 1062 1169 1286 1414
9

00 00 60 6 .6 .06 9.4 2.3 1.5 7.69
Commissio
n 0.6
12
00
13
20
14
52
159
7.2
1756
.92
1932
.61
2125
.87
2338
.46
2572
.31
2829
.537
Total
variable
costs
25
20
0
27
72
0
30
49
2
335
41.2
3689
5.3
4058
4.9
4464
3.3
4910
7.7
5401
8.4
5470
4.4
Fixed cost
Bills
60
00
60
00
60
00
600
0 6000 6000 6000 6000 6000 6000
Loan amount
12
00
0
12
00
0
12
00
0
120
00
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
Rent
50
00
50
00
50
00
500
0 5000 5000 5000 5000 5000 5000
Royalties
54
00
54
00
54
00
540
0 5400 5400 5400 5400 5400 5400
Fees
80
00
80
00
80
00
800
0 8000 8000 8000 8000 8000 8000
Total fixed
costs
364
00
364
00
364
00
3640
0
3640
0
3640
0
3640
0
3640
0
3640
0
3640
0
Total
expenses
616
00
641
20
668
92
6994
1.2
7329
5.32
7698
4.85
8104
3.34
8550
7.67
9041
8.44
9110
4.39
Particulars Jan Feb
Marc
h April May June July Aug Sept Oct Nov Dec
Initial cash 50000
Bank loan 55000
Income from
online sales 32000 40000 35000
3800
0
4100
0
4200
0
3600
0
2800
0
2700
0
2750
0
2800
0 33000
Income from
in-store sales 22400 56400 56800
5710
0
5880
0
6200
0
6640
0
6870
0
6540
0
6000
0
6080
0 64400
Sales income
from fashion
clothing 10000 10000 10000
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0 10000
Sales income
from hair
and beauty
12000 12000 12000 1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
12000
10

products
Receipts
from
disposal of
old store
building
3000
00
Total interest
receivables
3000
0 30000
Total cash
income
18140
0 118400
11380
0
1171
00
1218
00
4560
00
1244
00
1187
00
1144
00
1095
00
1108
00
14940
0
Cash
disbursement
Store and
warehouse
building
lease rental
14400
0
Purchase of
office and
fire
Equipment 80000
Purchase of
delivery van
and cars
15000
0
Shelves and
store
furniture 50000
Purchase of
fork lift for
70000
11

warehouse
Store
worker’s
wages 11000 11000 11000
1100
0
1100
0
1100
0
1100
0
1100
0
1400
0
1400
0
1400
0 14000
Heating and
lighting 2000 2000 2000 2000 2000 2000 2000 2000 2700 2700 2700 2700
Council
taxes 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Purchase of
cloths 40000 40000
4000
0
4000
0
5500
0
5500
0
Insurance 5000
Fuel and
maintenance 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800
Total cash
outflow
55030
0 21300 56300
1630
0
5630
0
1630
0
5630
0
1630
0
7500
0
2000
0
7500
0 20000
Net cash
balance
-
36890
0 97100 57500
1008
00
6550
0
4397
00
6810
0
1024
00
3940
0
8950
0
3580
0
12940
0
Opening
cash balance 0
-
368900
-
27180
0
-
2143
00
-
1135
00
-
4800
0
3917
00
4598
00
5622
00
6016
00
6911
00
72690
0
Closing
cash
balance
-
36890
0
-
271800
-
21430
0
-
1135
00
-
4800
0
3917
00
4598
00
5622
00
6016
00
6911
00
7269
00
85630
0
12

MONITOR PERFORMANCE
Wool worth Ltd can use performance budgeting in keeping record of all the
transactions takes places in an entity. This budget helps an entity in forecasting future
performance of the business by utilizing current facts and figures. Motive of this budgeting is
to manage the financial resources held in an entity for long term purpose by considering all
the important criteria’s (Mullie, Schwartzman, Zwerling and N’Diaye, 2017). Performance
budgeting helps in building relationships between funding level and expected outcomes
generated by the business concern. Current budgeting approach has categorized into two
categories such as private entity and public entity. Performance budgeting is based on three
different elements such as final outcome, strategy and activity. Goals and the objectives
crafted by the firm used as various criteria’s in improving the performance of the firm in
achieving all the desired final outcomes within a given span of time (Azizoddin and et.al.,
2017). Performance budgeting is suitable for private entities as quality of the services
delivered by an entity depends on the overall performance of an entity. Positive as well as
negative performance of the firm. Performance budgeting is based on financial as well as
non-financial metric such as activity based costing in which various costs incurred in an
entity in segregating all the costs among various departments takes places in an entity.
Planning and controlling measures used by the firm to keep track on all the expenses incurred
in an entity.
CONCLUSION
It can be summarized from the above study that Sales budget and expense budget
comes under forecast budgeting in predicting the performance of the firm. Performance
budgeting is used by the business concern in monitoring the performance of an entity by
considering all the factors of an entity. Current report targets positive aspects of the business
concern by spotting all kinds of costs incurred in a firm to eliminate same by following
various tools and techniques.
13

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costs of bevacizumab in recurrent glioblastoma: A quality adjusted survival and cost
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Durojaiye, O. C., Bell Gorrod, H., Andrews, D., Ntziora, F. and Cartwright, K., 2017.
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Webb, M and et.al., 2017. Cost effectiveness of a government supported policy strategy to
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growing rod for treatment of early onset scoliosis: Cost analysis from implantation till
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Woolworth, D. S., 2017. Sound systems in reverberant spaces: Approaches in practice. The
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