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Performance Management of Green Motor Ltd

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Added on  2020-05-04

Performance Management of Green Motor Ltd

   Added on 2020-05-04

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Student NamePERFORMANCE MANAGEMENT - GREENMOTOR LTD
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ContentsIntroduction......................................................................................................................................1How the Economist’s and Accountant’s breakeven charts differ....................................................1Economist’s breakeven chart.......................................................................................................1Accountants Breakeven Chart......................................................................................................1Defining period of time, relevant range and fixed cost...................................................................2Breakeven Point and Margin of Safety of the company..................................................................2Recommendation to the Managing Director on Selecting Proposal................................................3Proposal analysis..........................................................................................................................4Proposal 1.....................................................................................................................................4Proposal 2.....................................................................................................................................4The Better Proposal......................................................................................................................4Conclusion.......................................................................................................................................5
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IntroductionIt is critical for any new business to undertake a performance management evaluation todetermine the businesses and identify a position at which the business is likely to break even onits investment and begin registering profits. This helps determine the number of products andtime Green Motor Ltd needs to sell before it begins registering profits. It also helps determinehow long the business will take to repay loans or capital invested into the business. This makes itcritical for any new business to evaluate performance and undertake analysis so as to secure thisdata which can be used to improve the on areas of weakness[ CITATION Rob121 \l 1033 ].How the Economist’s and Accountant’s breakeven charts differIt is important to understand predicted economists breakeven chart differs from the accountant'sbreak-even charts but both must be analysed together to help deliver a clear vision linked tobreaking even analysis[ CITATION BPP17 \l 1033 ].Economist’s breakeven chartThe Economist’s breakeven chart is based on theoretical figures which are estimated and fixed.These results in delivering fixed expenses on an average between the markets high and low. Thischart does not include variables and is limited to a single predictable line graph which isconsistent and flows predictably. Timelines are have fixed flexibility delivered on a variablepercentage of the predicted timeline which results in the chart being generalized and not veryaccurate when compared to the practical output of the projects performance and reportingschedule[CITATION Rob051 \p 168 \l 1033 ]. This chart is usually developed as a guideline duringthe business planning process but will from the accountant's break-even chart when comparedafter X duration.
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Accountants Breakeven ChartThe Accountants Breakeven Chart is the more accurate chart of the two due to it using true coststo create the chart. This results in the chart differing considerably by up to +/- 10% of theEconomist’s breakeven chart. This chart will deliver a more accurate result related to the exactbreakeven point for the business and can be calculated to a definite number. Unlike theeconomist's chart this chart is dependent on data collected from the business sales, experiencesand profits which results in the results also different every month[ CITATION Mic10 \l 1033 ]. Thismakes the accountant's break-even chart more accurate towards calculating a business’s monthlybreak-even rate after which the business can begin registering profits.
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