Review And Analyze Data Information

Actual budget

The figures reveal that there has been optimum variance in the case of the employment expenses like the financial component of superannuation, wages and salaries and other employer expenses. The degree of variance that has been obtained has been majorly in the case of expenses and the cost of the services that are required for the purpose of business.

The specific areas that are needed to be investigated are the expenditures that have been incurred by business and the cost of the services that are required for the continuation of the business services.

The area of sales that has been generating optimum revenue in a constant rate are the food sales and the catering fees.

The area of sales that requires due attention is the sales in regards to beverage sales.

The expenses that need close analysis for good and bad results are essentially the expenses that reveal a higher degree of variance. The expenses that reflect a good result are the expenses related to water that has been incurred by the firm. However, the budget variance reveals that most of the expenses reflect the results that are not good. These expenses particularly are the expenses related to superannuation, wages and salaries, other employer expenses and marketing expenses (Armitage, Webb and Glynn 2016).

The reason for the obtained results may be as follows;

• The management of the restaurant is unable to decrease the cost of sales and other expenses (Lueg 2015)
• The management of the restaurant is unable to utilize the promotional strategies for increasing the total amount of revenue incurred (Lueg 2015)
• The management of the firm has been spending more in financing the employees rather than focusing on the improvement of the quality of food or services produced (Lueg 2015)

The concerned person to discuss will be the sales and production department of the chosen café business.

The financial information that has been reflected in the financial statements of the company indicates that the business has been following a rising trend. The total revenue of the firm that has been incurred by the café for the financial year of 2016-17. However, the gross profit has revealed an unfavorable variance of $19,005.19. This means that the management of the café has not been performing as planned or estimated. However, the particulars of the financial statement imply that the growth of the firm has been sustainable. This can be evidently derived from the fact that the total sales of the firm has been increasing since the financial year of 2013-14. The gross profit incurred by the café business has been $441,225 for the financial year of 2013-14. The gross profit for the financial year of 2014-15 has been $497,300. The gross profit for the financial year of 2015-16 has been $590,000. The gross profit for the financial year of 2016-17 has been $688,370. Thus, this indicates that the business conducted by the café is quite sustainable. Furthermore, the inflow of cash in all probabilities, continuous implying that there is no major concern in regards to the financial performance by the firm.

The primary causes for variance to key performance indicators of total sales, gross profit % and net profit value can be summarized as follows:

• The gross profit a percentage of sales has decreased in the financial year of 2016-17 due to the failure of the management to curb the costs related to the business operations
• The individual items that represent the highest degree of variance in the report are the wages and salaries, superannuation, depreciation expense. The primary reason for such a variance has been that the management of the café has been focusing more on financing the employees or staff of the café rather than focusing on improving the promotional and sales strategy
• The items in the variance report that represent a higher degree of variance in terms of percentage are beverage purchases, food purchases and net profit. These financial components have been representing a higher degree of variance. This indicates that the firm has not been performing in accordance to the estimated standards. This can be mitigated by the reduction in the cost in regards to production.

The audit trails refer to the establishment or the implementation of a particular system that traces the transactions back to their generation point in relation to the items that have been incurred in a particular accounting cycle.

The particular issue that has been presented in the question is that the development of the particular audit trails that can be implemented for maintaining the internal controls. The audit trails can be listed down as follows:

• The discounts that are given to the customers should be further classified by the separation of the invoice amount and the discounted amount. This can be achieved by the implementation of a suitable accounting software
• The cash registers should be reconciled. This can be achieved by the particular function of segregation of duties of the employees
• The issue related to the service invoices can be resolved by the appointment of a particular employee who can carry out the proceedings in regards to the checking of the completion of the assigned task
• The communication between the shop floor and the head office can also be increased by developing a secured channel that can be utilized by maintaining the required privacy standards
• The reconciliation of debtors can also be carried out by the segregation of the duties
• The installation of a suitable accounting software can resolve the problem of pre-numbering the cash receipts

The departments that are needed to be considered for the successful implementation of the budget are the sales department and the human resource department. The successful implementation of the budget will require curbing down the wages and salaries of the employees and implementing strategies that will effectively reduce the cost of sales and business related operations.

The accounting software that can be successfully adopted in the business is MYOB (Sponem and Lambert 2016). The essential features of MYOB are as follows:

• The accounting software facilitates the computation of the GST and BAS
• The management of the payroll
• Inventory management
• Management of the multiple currencies
• Accurate time billing
• Access by multiple users

References and Bibliography

Armitage, H.M., Webb, A. and Glynn, J., 2016. The use of management accounting techniques by small and medium?sized enterprises: a field study of Canadian and Australian practice. Accounting Perspectives, 15(1), pp.31-69.

ElKelish, W.W. and Rickards, R.C., 2018. Organisational culture’s impact on management accounting and control practices in the United Arab Emirates. International Journal of Accounting, Auditing and Performance Evaluation, 14(1), pp.24-46.

Klychova, G.S., Faskhutdinova, ?.S. and Sadrieva, E.R., 2014. Budget efficiency for cost control purposes in management accounting system. Mediterranean journal of social sciences, 5(24), p.79.

Lueg, R. and Malmmose, M., 2014. Customer accounting with budgets and activity-based costing: a case study in electronic commerce.

Lueg, R., 2015. Product customization: A case study on choosing the right costing system.

McLellan, J.D., 2014. Management Accounting Theory and Practice: Measuring the Gap in United States Businesses. Journal of Accounting, Business & Management, 21(1).

Pavlatos, O. and Kostakis, H., 2015. Management accounting practices before and during economic crisis: Evidence from Greece. Advances in accounting, 31(1), pp.150-164.

Sponem, S. and Lambert, C., 2016. Exploring differences in budget characteristics, roles and satisfaction: A configurational approach. Management Accounting Research, 30, pp.47-61.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order