Budgeting technique for planning and control



ASSESSMENT TITLE: Budgeting technique for planning and control

THIRD SEMESTER – 2021 / 2022


MODULE TITLE: Accounting for Performance and Control

ASSESSMENT NAME: Coursework (individual coursework)



WORD COUNT: 800 – 1000 words report

SUBMISSION DATE/TIME: 4TH July 2022 by 13:00 UK Time.

SUBMISSION METHOD: Submission through Turnitin ONLY

FORM OF FEEDBACK: Online feedback via AULA


This assignment is designed to assess learning outcome:

L3. Analyse the complex issues arising from the budgetary process.


(1) A redundant manager who received compensation of £80 000 decides to commence business on 4 January, manufacturing a product for which he knows there is a ready market. He intends to employ some of his former workers who were also made redundant but they will not all commence on 4 January. Suitable premises have been found to rent and second-hand machinery costing £60 000 has been bought out of the £80 000. This machinery has an estimated life of five years from January and no residual value.

Other data:

1. Production will begin on 4 January and 25% of the following month’s sales will be manufactured in January. Each month thereafter the production will consist of 75% of the current month’s sales and 25% of the following month’s sales.

2. Estimated sales are:

Units £

January Nil Nil

February 3200 80000

March 3600 90000

April 4000 100000

May 4000 100000

3. Variable production cost per unit


Direct Material 7

Direct Wages 6

Variable Overhead 2


4. Raw material stocks costing £10 000 have been purchased (out of the manager’s £80 000) to enable the production to commence and it is intended to buy, each month, 50% of the materials required for the following month’s production requirement. The other 50% will be purchased in the month of production. Payments will be made 30 days after purchase.

5. Direct workers have agreed to have their wages paid into bank account on the seventh working day of each month in respect of previous month’s earnings.

6. Variable production overhead: 60% is to be paid in the month following the month it was incurred and 40% is to be paid one month later.

7. Fixed overheads are £4000 per month. One quarter of this is paid in the month incurred, one half in the following month, and the remainder represents depreciation on the second-hand machinery.

8. Amount receivable: a 5% cash discount is allowed for payments in the current month and 20% of each month’s sales qualify for this discount. 50% of each month’s sales are received in the following month, 20% in the third month, and 8% in the fourth month. The balance of 2% represents anticipated bad debts.

You are required to:

(a) Prepare a cash budget for each of the first four months, assuming that over facilities will be available.

(40 marks)

(b) State the amount receivable from customers in May.

(10 marks)

(2) Better budgeting in recent years may have been seen as a movement from “incremental budgeting” to alternative budgeting approaches. However, academic studies (e.g. who needs Budgets – Hope and Fraser, 2003) argue that the annual budget model may be seen as (i) having a number of inherent weaknesses and (ii) acting as a barrier to the effective implementation of alternative models for use in the accomplishment of strategic change.

Critically discuss the above statement. In your analysis, you need to Identify and critically assess FIVE inherent weaknesses of the annual budget model irrespective of the budgeting approach that is applied. (50marks)

(Total: 100 marks)


Your work should be word processed in accordance with the following:

Font style, Times New Roman, font size 12

1.5 line spacing.

The page orientation should be ‘portrait’

Margins on both sides of the page should be no less than 2.5 cm

Pages should be numbered

Your name should not appear on the script.

Your student number should be included on every page.

Skills Advice

Pay particular attention to:

Your introduction,

Your conclusion,

The use of headings and/or signpost words

Paragraph structure


The university expects students to use Harvard referencing as You should be careful to include citations within your work as well as a reference list at the end.

Academic integrity

You should use your own words, not quote phrases from textbooks. Do not quote from lecture handouts. It is expected that you will use textbooks and journal articles to obtain an understanding of the issues involved. If you use textbooks and any journal articles as the source of ideas for your report, you must provide a reference. Not to do so would be plagiarism – a breach of regulations with serious penalties.

Assessment Criteria

Assessment criteria

Maximum mark

Relevance of materials used to the task set


Application of appropriate techniques


Logical sequence and development


Evidence for the calculated figures


Appropriate depth of analysis


Evaluation of issues/results


Use of supporting data/evidence


Use of referencing system and bibliography


Overall presentation and structure


Total mark