Management Accounting Report: Flexible Budgeting Implementation

This management accounting report addresses the enhancement of the budgeting process for Exhibition Furniture. It suggests implementing flexible budgeting to compute expenses based on revenue changes and using quarterly budgets to track business goals, control expenses, and maximize profits. The report emphasizes the importance of variance analysis and monitoring revenues to make informed decisions, such as curtailing poorly performing products. It recommends reducing overhead consumption per square meter for Oak tops and Oak Legs to improve profitability. The analysis includes a memorandum to the CEO, detailing the benefits of these budgeting improvements.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Answer to Part 1:........................................................................................................................2
Answer to A:..............................................................................................................................2
Answer to B:..............................................................................................................................2
Answer to C:..............................................................................................................................2
Answer to D:..............................................................................................................................3
Answer to E:...............................................................................................................................3
Answer to F:...............................................................................................................................4
Answer to G:..............................................................................................................................4
Answer to H:..............................................................................................................................4
Answer to I:................................................................................................................................5
Answer to J:................................................................................................................................6
Answer to K:..............................................................................................................................6
Answer to L:...............................................................................................................................7
Answer to Part 2:........................................................................................................................8
Reference List:.........................................................................................................................10

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Answer to Part 1:
Answer to A:
Answer to B:
Answer to C:

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Answer to D:
Answer to E:

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Answer to F:
Answer to G:
Answer to H:

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Answer to I:

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Answer to J:
Answer to K:

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Answer to L:

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Answer to Part 2:
Memorandum
To: CEO of Exhibition Furniture
From: ABC Consulting Agency
Date: 10th February 2018
Subject: Enhancement in Budgeting Process
A continuous improvement in respect of the Exhibition Furniture regarding the
improvement of the budgeting procedure can be undertaken in this regard. In order to
improve the profitability and the budgeting procedure an important assumption can be stated
that maximum amount of improvement can be gained by reducing the overhead consumption
per one square meter of the either Oak tops and Oak Legs. Furthermore, an improvement can
be bought forward in the budgetary procedure by implementing the tools of flexible
budgeting.
The application of flexible budgeting would enable the computations of different level
of expenses for variable costs depending upon the changes occurring in the original revenue
(Martinez et al., 2015). The actual sales or other activity measures can be incorporated into
the flexible budget following the completion of the accounting period in order to produce a
budget which is specific to the units of desk manufactured. The flexible budget would help in
facilitating the comparison of the original results with the projected amount for further
implementing the control. The flexible budget would enable the CEO of the exhibition
furniture to recognize the fixed costs and segregate the same in the budgeted model.
The management would be able to determine the degree of variable costs that occurs
with the changes in the activity (Narasimhan, 2017). The budgeted amount with the actual

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amount under the flexible budget would generate variance which is very much relevant than
those that are obtained under the static budget. This is because both the budgeted and the
actual expenditure forms the base of the identical activity measurement.
Alternatively, the application of the quarterly budget is another means of improving
the budgetary procedure. As in the case of Exhibition Furniture, the application of the
quarterly budget would help in making sure that the firm would be able to keep track of the
business goals by implementing control on expenses and maximization of probable profits
(Fan & Chen, 2016). The application of the quarterly budget would help in detecting the
conditions by evaluating the financial reports and comparing the same with the business plan.
In case of Exhibition Furniture, the application of quarterly budgets would enable the
CEO to monitor the revenues with the help of quarterly reports and take decision of curtailing
the poorly performing product or investment. The sales report may be helpful in
demonstrating the glowing figures, if the sales revenue is low then the profits would be
adversely impacted (Lanen, 2016). The quarterly budget report would help in alerting the
management regarding the change in revenues. The reports obtained from the quarterly
budget would help in showing the new upward rising or downward falling trend.
Thank You
From ABC Consulting Agency.

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Reference List:
FAN, S. Z., & CHEN, G. Y. (2016). A Flexible Budget Model of Listed Companies to
Establish the Simulation Analysis. Computer Simulation, 12, 090.
Lanen, W. (2016). Fundamentals of cost accounting. McGraw-Hill Higher Education.
Martinez-Sanchez, V., Kromann, M. A., & Astrup, T. F. (2015). Life cycle costing of waste
management systems: Overview, calculation principles and case studies. Waste
management, 36, 343-355.
Narasimhan, M. S. (2017). Types of Budget.