- 10 Marks
PSAF – Nov 2015 – L2 – Q3b – Treasury Management in the Public Sector
Describe five weaknesses in Nigeria's cash management practices.
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Question Tag: Budgetary Control
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+ past questions and counting.
- 20 Marks
MA – Nov 2019 – L2 – Q2b – Budgetary Control
Prepare a budgetary control statement for MZ Ltd for May 2019 using a flexible budget basis.
Question
b) The following monthly budgeted cost values have been taken from the budget working papers of MZ Ltd for the year ended 30 September 2019.
During May 2019, actual costs for the activity level of 82% were as follows:
Item GH¢
Direct Materials 10,500
Direct Labour 12,250
Direct Expenses 5,600
Production Overhead 6,250
Selling Overhead 15,150
Administration Overhead 14,200
Total 63,950
Required:
Prepare a budgetary control statement for MZ Ltd on a flexible budget basis for the month of May 2019.
(10 marks)
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- 10 Marks
MA – Aug 2022 – L2 – Q3b – Budgetary control
This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.
Question
The Finance Manager of Baya Ltd has been criticised for using an incremental budget method in preparing the company’s budget. She, however, needs to respond to the issues raised at a board meeting and as a result, she is considering using different budgeting methods for the year-end 31 December 2022. She has asked you, the Management Accountant, to do some preliminary work to help her decide on which of the methods to use. She believes a rolling budget would be ideal for the fast-growing Baya Ltd in a relatively high inflationary country.
Baya Ltd’s incremental budget for the year-end 31 December 2022 is given below:
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Total | |
|---|---|---|---|---|---|
| Revenue (GH¢’000) | 17,520 | 17,958 | 18,407 | 18,867 | 72,752 |
| Cost of sales | 9,636 | 9,877 | 10,124 | 10,377 | 40,014 |
| Gross profit | 7,884 | 8,081 | 8,283 | 8,490 | 32,738 |
| Distribution costs | (1,577) | (1,616) | (1,657) | (1,698) | (6,548) |
| Administration | (4,214) | (4,214) | (4,214) | (4,214) | (16,856) |
| Operating profit | 2,093 | 2,251 | 2,412 | 2,578 | 9,334 |
The actual figures for quarter 1 (which has just been completed) are:
On the basis of the quarter 1 results, sales volume growth of 3% per quarter is now expected.
Required:
i) Explain how Baya Ltd will operate a rolling budget.
(2 marks)
ii) Recalculate the quarterly rolling budget for Baya Ltd for the last three quarters of the year 2022 and the first quarter of 2023.
(8 marks)
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- Tags: Budgetary Control, Incremental Budgeting, Rolling Budget
- Level: Level 2
- Topic: Budgetary control
- Series: AUG 2022
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- 4 Marks
PSAF – Nov 2016 – L2 – Q3d – Public sector fiscal planning and budgeting.
Explain four methods used by the government to ensure compliance with budgetary control regulations.
Question
The budgetary control function ensures effective control over government units in public spending and accountability for all funds, property, and other assets for which each department or agency is responsible.
Required:
Explain FOUR methods used by the government to ensure that government entities comply with budgetary control regulations. (4 marks)
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- 20 Marks
MA – Nov 2020 – L2 – Q1 – Budgetary Control
Prepare a financial analysis statement showing the current annual forecast of costs, revenues, and profits for the years 2019-2021 for a motor car manufacturer.
Question
A motor car manufacturer has been specializing in the production and sale of Bedford model cars. The model is somewhat outmoded, and the current sales forecast indicates that the current (2018) sales level of 150,000 will be the same as in 2019 but will decline to 130,000 cars in 2020 and 110,000 cars in 2021. The company supplies according to orders received, and no stocks are held. Carbon monoxide emission regulations will prevent the model from being manufactured and sold after December 2021.
The company’s current estimates of the selling price and costs in 2019 are as follows:
| Per car (GH¢) | Amount (GH¢) |
|---|---|
| Selling Price | 11,200 |
| Production costs: | |
| – Material and Labour (vary with production volume) | 3,600 |
| – Assembly | 4,000 |
| – Delivery | 2,500 |
- 75% and 40% of the assembly and delivery costs respectively are fixed, and the remainder vary with production volume.
- In addition, the company estimates that it will incur the following non-production costs:
- Marketing costs of GH¢60 million would be amortized on a straight-line basis over three years.
- The Administration costs of GH¢10 million are fixed per annum.
- The selling price, variable costs per car, and total fixed costs are expected to remain constant throughout the period from 2019 to 2021.
The company’s Managing Director is unhappy with the current annual profit forecasts for 2019–2021 based on the information above and believes that the company has the potential to increase the profit to a desired level of GH¢245 million in each of the years 2019 to 2021. The Managing Director has undertaken a strategic review and developed the following strategies to eliminate the gap:
Strategy 1: A marketing proposal will enable the company to enter a new overseas market with the result that the total (including the overseas market) sales level will be stabilized at 160,000 cars per annum from 2019 to 2021. The market entry costs will be GH¢30 million for each of the three years.
Strategy 2: A re-design of the car will enhance its sales appeal and will permit the company to increase its selling price to GH¢12,000. The re-design costs are GH¢30 million and are to be amortized over three years on a straight-line basis.
Strategy 3: A radical cost reduction program will improve efficiency and lower all variable costs by 20%. This will add GH¢70 million to the annual fixed overheads each year from 2019 to 2021.
Required:
a) Prepare a financial analysis statement showing the current annual forecast of costs, revenues, and profits for each of the years 2019 to 2021 and briefly comment on the figures. (Ignore the time value of money)
b) Calculate the profit gap for 2019, 2020, and 2021.
c) Estimate the profit in 2019 if:
i) Strategy 1 was implemented;
ii) Strategy 2 was implemented;
iii) Strategy 3 was implemented.
d) Evaluate which strategy to implement
Find Related Questions by Tags, levels, etc.
- Tags: Budgetary Control, Financial Statement, Forecasting, Marginal Costing, Profit Analysis
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2020
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- 5 Marks
MA – Nov 2018 – L2 – Q2a – Relevant cost and revenue
Discuss the relevance of classifying costs as fixed or variable in decision-making processes, with a focus on their relevance or irrelevance to decisions.
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- 5 Marks
MA – Nov 2021 – L2 – Q4c – Budgetary Control
Explain factors that may lead to harmful behavior due to budgetary control.
Question
c) The entire process of budgetary control may negatively affect the behavior of management and staff, leading to the non-achievement of goals.
Required:
Explain THREE (3) factors that may account for such harmful behavior. (5 marks)
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- Tags: Behavioral Factors, Budgetary Control, Management, Organizational Behavior
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2021
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- 8 Marks
MA – Nov 2016 – L2 – Q5b – Budgetary control
Identify and explain reasons for the unsuccessful implementation of budgetary control systems in organizations.
Question
Budgetary control is one of the important tools used by management, yet most organizations are unable to derive its full benefits.
Required:
Identify and explain FOUR reasons that may account for the unsuccessful implementation of a budgetary control system.
(8 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Budgetary Control, Implementation Challenges, Management practices
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2016
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- 10 Marks
PSAF – Nov 2015 – L2 – Q3b – Treasury Management in the Public Sector
Describe five weaknesses in Nigeria's cash management practices.
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Report an error
- 20 Marks
MA – Nov 2019 – L2 – Q2b – Budgetary Control
Prepare a budgetary control statement for MZ Ltd for May 2019 using a flexible budget basis.
Question
b) The following monthly budgeted cost values have been taken from the budget working papers of MZ Ltd for the year ended 30 September 2019.
During May 2019, actual costs for the activity level of 82% were as follows:
Item GH¢
Direct Materials 10,500
Direct Labour 12,250
Direct Expenses 5,600
Production Overhead 6,250
Selling Overhead 15,150
Administration Overhead 14,200
Total 63,950
Required:
Prepare a budgetary control statement for MZ Ltd on a flexible budget basis for the month of May 2019.
(10 marks)
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Report an error
- 10 Marks
MA – Aug 2022 – L2 – Q3b – Budgetary control
This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.
Question
The Finance Manager of Baya Ltd has been criticised for using an incremental budget method in preparing the company’s budget. She, however, needs to respond to the issues raised at a board meeting and as a result, she is considering using different budgeting methods for the year-end 31 December 2022. She has asked you, the Management Accountant, to do some preliminary work to help her decide on which of the methods to use. She believes a rolling budget would be ideal for the fast-growing Baya Ltd in a relatively high inflationary country.
Baya Ltd’s incremental budget for the year-end 31 December 2022 is given below:
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Total | |
|---|---|---|---|---|---|
| Revenue (GH¢’000) | 17,520 | 17,958 | 18,407 | 18,867 | 72,752 |
| Cost of sales | 9,636 | 9,877 | 10,124 | 10,377 | 40,014 |
| Gross profit | 7,884 | 8,081 | 8,283 | 8,490 | 32,738 |
| Distribution costs | (1,577) | (1,616) | (1,657) | (1,698) | (6,548) |
| Administration | (4,214) | (4,214) | (4,214) | (4,214) | (16,856) |
| Operating profit | 2,093 | 2,251 | 2,412 | 2,578 | 9,334 |
The actual figures for quarter 1 (which has just been completed) are:
On the basis of the quarter 1 results, sales volume growth of 3% per quarter is now expected.
Required:
i) Explain how Baya Ltd will operate a rolling budget.
(2 marks)
ii) Recalculate the quarterly rolling budget for Baya Ltd for the last three quarters of the year 2022 and the first quarter of 2023.
(8 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Budgetary Control, Incremental Budgeting, Rolling Budget
- Level: Level 2
- Topic: Budgetary control
- Series: AUG 2022
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- 4 Marks
PSAF – Nov 2016 – L2 – Q3d – Public sector fiscal planning and budgeting.
Explain four methods used by the government to ensure compliance with budgetary control regulations.
Question
The budgetary control function ensures effective control over government units in public spending and accountability for all funds, property, and other assets for which each department or agency is responsible.
Required:
Explain FOUR methods used by the government to ensure that government entities comply with budgetary control regulations. (4 marks)
Find Related Questions by Tags, levels, etc.
Report an error
- 20 Marks
MA – Nov 2020 – L2 – Q1 – Budgetary Control
Prepare a financial analysis statement showing the current annual forecast of costs, revenues, and profits for the years 2019-2021 for a motor car manufacturer.
Question
A motor car manufacturer has been specializing in the production and sale of Bedford model cars. The model is somewhat outmoded, and the current sales forecast indicates that the current (2018) sales level of 150,000 will be the same as in 2019 but will decline to 130,000 cars in 2020 and 110,000 cars in 2021. The company supplies according to orders received, and no stocks are held. Carbon monoxide emission regulations will prevent the model from being manufactured and sold after December 2021.
The company’s current estimates of the selling price and costs in 2019 are as follows:
| Per car (GH¢) | Amount (GH¢) |
|---|---|
| Selling Price | 11,200 |
| Production costs: | |
| – Material and Labour (vary with production volume) | 3,600 |
| – Assembly | 4,000 |
| – Delivery | 2,500 |
- 75% and 40% of the assembly and delivery costs respectively are fixed, and the remainder vary with production volume.
- In addition, the company estimates that it will incur the following non-production costs:
- Marketing costs of GH¢60 million would be amortized on a straight-line basis over three years.
- The Administration costs of GH¢10 million are fixed per annum.
- The selling price, variable costs per car, and total fixed costs are expected to remain constant throughout the period from 2019 to 2021.
The company’s Managing Director is unhappy with the current annual profit forecasts for 2019–2021 based on the information above and believes that the company has the potential to increase the profit to a desired level of GH¢245 million in each of the years 2019 to 2021. The Managing Director has undertaken a strategic review and developed the following strategies to eliminate the gap:
Strategy 1: A marketing proposal will enable the company to enter a new overseas market with the result that the total (including the overseas market) sales level will be stabilized at 160,000 cars per annum from 2019 to 2021. The market entry costs will be GH¢30 million for each of the three years.
Strategy 2: A re-design of the car will enhance its sales appeal and will permit the company to increase its selling price to GH¢12,000. The re-design costs are GH¢30 million and are to be amortized over three years on a straight-line basis.
Strategy 3: A radical cost reduction program will improve efficiency and lower all variable costs by 20%. This will add GH¢70 million to the annual fixed overheads each year from 2019 to 2021.
Required:
a) Prepare a financial analysis statement showing the current annual forecast of costs, revenues, and profits for each of the years 2019 to 2021 and briefly comment on the figures. (Ignore the time value of money)
b) Calculate the profit gap for 2019, 2020, and 2021.
c) Estimate the profit in 2019 if:
i) Strategy 1 was implemented;
ii) Strategy 2 was implemented;
iii) Strategy 3 was implemented.
d) Evaluate which strategy to implement
Find Related Questions by Tags, levels, etc.
- Tags: Budgetary Control, Financial Statement, Forecasting, Marginal Costing, Profit Analysis
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2020
Report an error
- 5 Marks
MA – Nov 2018 – L2 – Q2a – Relevant cost and revenue
Discuss the relevance of classifying costs as fixed or variable in decision-making processes, with a focus on their relevance or irrelevance to decisions.
Find Related Questions by Tags, levels, etc.
Report an error
- 5 Marks
MA – Nov 2021 – L2 – Q4c – Budgetary Control
Explain factors that may lead to harmful behavior due to budgetary control.
Question
c) The entire process of budgetary control may negatively affect the behavior of management and staff, leading to the non-achievement of goals.
Required:
Explain THREE (3) factors that may account for such harmful behavior. (5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Behavioral Factors, Budgetary Control, Management, Organizational Behavior
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2021
Report an error
- 8 Marks
MA – Nov 2016 – L2 – Q5b – Budgetary control
Identify and explain reasons for the unsuccessful implementation of budgetary control systems in organizations.
Question
Budgetary control is one of the important tools used by management, yet most organizations are unable to derive its full benefits.
Required:
Identify and explain FOUR reasons that may account for the unsuccessful implementation of a budgetary control system.
(8 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Budgetary Control, Implementation Challenges, Management practices
- Level: Level 2
- Topic: Budgetary control
- Series: NOV 2016
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