Answer Happy

Question 1
Ali has worked as the Catering Manager for Bright Star University
for several
years. As all accounting and reporting had been managed centrally,
budget
responsibility had not been part of the requirements of the role.
Targets for meal
numbers were the only objective set and all meals had a standard
recipe and
varieties were rotated monthly in a fixed pattern for example,
every third
Thursday was vegetable lasagne. Ali has 2 supervisors as
support.
However, a new senior management team have been appointed and
a
restructuring has taken place at Board level which has resulted in
a new budget
management system being introduced. No consultation has taken place
and the
new system has been imposed with immediate effect. Ali has received
the
following instructions and information:
Bright Star University
To: Department Manager: Catering
From: Head of Management Accounting
Re: Budget Sept 2022-23
As you are aware, the University is going through a programme of
change and a
new budgeting system is being introduced. With immediate effect you
will be
responsible for the costs and revenues associated with your area
of
responsibility. The budget that has been set for the accounting
year Sept 2022-
23 is shown below. Reporting will be quarterly. This new system of
control is to
be part of the new culture of the University.
You will be provided with a quarterly performance report comparing
actual
revenue and expenditure to the original budget. Any variation from
budget will
require investigation, after which you will need to prepare a
report detailing
explanations for the variations to myself within ten working days
of the issue of
the performance report. A plan will also be required outlining
corrective action to
be taken.
Thank you for your assistance.
A Bean ACCA
Page 8 of 21
Annual Budget: Sept 2022-23: Catering
Meals produced 135,000
£
Revenue £880,000
Expenses:
Ingredients 340,000
Manager & supervisor costs 90,000
Staff costs 105,000
Heat & power 11,000
Cleaning materials 3,000
Depreciation 25,000
Pans & utensils 2,500
Crockery & cutlery 1,500
Allocated central overheads 125,000
Profit 177,000
No calculations are required in your answer for Question 1.
Required:
a) Using the different purposes of a budget as a basis for your
evaluation,
evaluate the new budgeting system being introduced.
(7 marks)
b) Make recommendations as to how the new budgeting process should
be
improved.
(7 marks)
c) Using the Catering Department as an example, evaluate how the
principles
of Beyond Budgeting could be implemented at the University instead
of the
traditional budgetary system. Consider any issues that may
arise.
(6 marks)
(TOTAL 20 Marks)