The Contribution of Management Accountants in the Formulation of Corporate Strategy in Moonsnail - Essay Example

Management Accounting The contribution of management accountants in the formulation of corporate strategy in Moonsnail The company should pursue activity based accounting method strategy. This allows for more accurate costing of company’s processes and activities. Management accountants are among the most important employees in an organization because their skills are important to make financial objectives and strategies as well financial monitoring and evaluation system. They largely influence the profit margins in an organization because they establish and set the cost of production. They also determine the price of goods and services that a business organization produces and sell. Management accountants provide important financial information that facilitate strategic planning, help to formulate and review budgets of the organization and identify existing discrepancies in budgets. They also remove wastages, set cost of production and prices of products produced as well as support good corporate governance. The above roles and functions of management accountants are explained below. First, management accountants facilitate strategic planning by providing information on costs and related activities in the organization. This is because they collect and analyze important information on all the activities that organizations engage in. The information may include all production, marketing and administrative costs. They also attempt to allocate costs and revenues to all activities in the organization. The management accountants record all the activities and associated cost. Therefore, they are able to develop indicators of business performance. In addition, they make comparison of various activities and develop benchmarks that form the basis of business monitoring and evaluation system for the business organization. The information they provide, help management teams to make various investment decision. Secondly, management accountants formulate and review budgets of the business organization. Budgets are important in apportioning financial resources to various activities of the company. Financial resources are scarce and require detailed analysis and planning to ensure that all departments receive adequate amount of money to conduct their daily operations. Management accountants enable the organization to allocate money and other resources to productive areas of the company based on their detailed cost analysis. This ensures that the business spends money only on what is important and that all activities are fairly considered. The budgets include capital budgets, cash budgets and production budgets. Management accountants conduct periodic reviews on the entity’s financial performance. They investigate and report results of significant variations in the budget to the management committee for further considerations. The management committee proceeds and takes remedial action in case of significant variations to prevent negative impacts on the company as recommended by the management accountants. The third reason why management accountants are important in an organization is that they Identify and remove wastages in a business organization. The management accountants through their detailed cost analysis are able to identify activities and associated costs. The activities that do not add value are removed and those that add value are enhanced. As a result, the management accountants help the company to improve their operations as well as allocate resources to deserving departments in the organization. This enables the organization to minimize their cost of production and increase the profits that they generate. Fifthly, management accountants do the costing and pricing of products and services in an organization (Scarlett and Scarlett 2007). Management accountants through activity based costing are able to analyze all the activities and associated costs in the organization. The result of business activities is the product. Therefore, management accountants identify all the costs associated with the product and sum them to arrive at the cost of the product. They proceed and set the price of the product considering the production cost and the prevailing market conditions. Therefore, they help organizations set cost and prices of the goods and services they produce. The sixth reason why management accountants are important is that they help to enhance corporate governance. Corporate governance promotes transparency and fairness in the organizations. The basis of corporate governance lies in the management accountants. This is because they understand nearly all the activities associated with the production of goods and services. Through their product and service analysis, they are able to put a ceiling on the amount of resources that a business organization can allocate for the production purposes. Most frauds happen due to diversion of organizational resources to personal use. Management accounts develop and monitor strict budgets to prevent diversion of organizational resources for personal use. Therefore, management accountants will help Moonsnail to manage its resources effectively. They also participate in developing organizational rules and guidelines that promote best practice in Moonsnail. 2. Financial analysis of Moonsnail’s baby cream Production of Moonsnail’s Baby Cream would increase the profitability of the Moonsnail. However, there are trade-offs that must arise. The trade off would result in opportunity costs of other products that are produced. For example, the company may forego bought in other products that do not earn much to the company to pursue the production of Moonsnail baby cream. Figure 1 Activity Based Costing Recipe for moon Baby Cream and Cost of Ingredients ingredients Quantity cost Quantity Cost per unit Total cost in $ Calendula grapeseed oil 266g 10.75/kg 0.266kg 10.75 2.8595 Charmomile Extract 10mm 69.09/476mm 10mm 0.145147 1.451471 Rosehip seed oil 50g 66.60/kg 0.05kg 66.6 3.33 Vitamin E 2g 105.50/kg 0.002kg 105.5 0.211 Aloe Vera gel 1cup 33/3.78 litres 0.25mm 8.730159 2.18254 Distilled Water 1cup 9.00/18 litres 0.25mm 0.5 0.125 Coconut oil 126g 52.70/20kg 0.126kg 2.635 0.33201 Beeswax 32g 11.50/kg 0.032kg 11.5 0.368 Jars 323.50/1000 30 0.3235 9.705 Top labels 17.40/1000 30 0.0174 0.522 Bottom labels 10.87/1000 30 0.01087 0.3261 labour labels 3hrs/ $6.50 3 6.5 19.5 Batch production cost 40.912621 Cost per unit produced 30/40.912621 1 1.363754 1.363754 The figure above show the activity based accounting used to determine the cost of producing the Moonsnail Baby Cream. Each batch produced comprises one litre of cream and yields 30 jars of finished product Cost per unit = (Total cost of producing one batch ÷ the number of jars produced) $40.912621 ÷30= $1.36 The cost of production per jar is $1.36. Moonsnail plan to sell the Baby Cream @ $9.95 retail and $6 wholesale. Moonsnail should launch the Moonsnail Baby Cream. This is because both retailer and wholesale price is much higher than the production cost. Therefore, the company would earn profit. The above analysis utilized Accounting Based Costing technique. This is because it is able to track all the production activities and associated cost accurately. Therefore, it is able generate accurate production cost for single jar of Baby Cream produced. 3. (a) Product cost comparison , first based on traditional method of overhead allocation and then by applying Activity Based Costing techniques Assumptions The time for processing the products does not include packaging time. Limitation of the analysis and ways to improved them It is big a challenge to work on figures that do not have full accounting information, organizations should engage services of an accountant to ensure that all financial records are complete. Figure 2   Soap Revenue /Cost per unit Creams/ oils  Revenue /Cost per unit Balms/ Salves  Revenue /Cost per unit Bought-in Revenue /Cost per unit Sales 40275 44.2 24374.0 3.2 12835. 3.4 3091.0 15.5 Materials 1162 1.3 1097.0 0.1 642.0 0.2 1546.0 7.7 Direct Labour 1369 1.5 4130.0 0.5 2002.0 0.5 0.0 0.0 Packaging (228) 1772 1.9 1024.0 0.1 578.0 0.2 188.0 0.9 Total 4303 4.7 6251.0 0.8 3222 0.8 1734 8.7 Time 152 253 127 0.0333 0.0000 0 Time allocation (process) 0.2 0.1700 0.0000446  0   Time allocation (packaging) 17 138 69 4 0.02 Total hours 169 391 196 4 Each unit time 10 m   2m   2m   0   Units 912   7590   3810   200   The figure above shows Activity based costing of respective products of Moonsnail Company. Traditional based costing Soap Creams/ oils Balms/ Salves Bought-in Sales 40275 24374.0 12835.0 3091.0 Materials 1162 1097.0 642.0 1546.0 Direct Labour 1369 4130.0 2002.0 0.0 Packaging (228) 1772 1024.0 578.0 188.0 Total 4303 6251.0 3222 1734 Total hours 169 391 196 4 Labour cost 1098.5 2541.5 1274 26 Cost per unit 3.92 2.46 2.53 66.69 Comparison between ABC and traditional accounting method  Costing approach Soap Creams/ oils Balms/ Salves Bought-in ABC 4.7 0.8 0.8 8.7 Traditional method 3.92 2.46 2.53 66.69 The products that Moonsnail buy and repackage are one of the most expensive products to make it ready for sale. They are the bought products in that have the highest production cost. While creams, oils cost the least to produce, and repackaged. The comparison between activity based costing and traditional cost accounting. According to Scarlett and Scarlett (2007), traditional cost accounting assume that cost objective consumes resources while activity based costing assume activities are consumed by cost objects. In addition, traditional costing use volumes as allocation basis while activity base costing use cost drivers at various levels. Finally, activity based costing is process oriented while traditional accounting method is structured-oriented. 3b. The reason why Activity Based Costing have not been extensively adopted in the United Kingdom Activity Based Costing has not been extensively adopted in the UK because of the following reasons. First, United Kingdom use traditional accounting methods. This is because United Kingdom is quite rigid as compared to other countries. Business entities are conservative and take their time to learn any new invention that comes into the market. They do not like to become victims of failed invention. As a result, most organizations take time before they adapt new accounting methods. They need assurances that the new inventions are actually profitable to implement and do not drain business financial resources. Therefore, their concerns for proven methods cause most business organizations to be rigid and slow the speed of adapting new accounting methods. Secondly, activity based costing is relatively complex as compared to the traditional accounting methods. Activity based costing can be challenging to most management accountants because it requires detailed analysis. It also require more time, experienced and highly skilled accounting personnel to do the costing for each activity in the organization. Activity based costing is tiring and require a person who can work for longer hours without giving up. Furthermore, a management accountant using the activity based costing method should have knowledge in various activities that takes place in both business and non-business organization. He or she should also be aware of the external environment in which the organization operates. The external environment includes the market and regulatory frameworks among others. The third reason why activity based costing is not popular in the United Kingdom is high cost of installing and maintaining activity based costing accounting methods. It is relatively expensive to install and manage new accounting systems. This is because more resources are needed to train accounting personnel on new accounting methods as well as purchasing equipments that come alongside with the new system. The old systems are also rendered irrelevant or obsolete. Consequently, most businesses organization perceives that loss incurred by rendering old accounting methods obsolete is too prohibitive. Fourthly, activity based costing is too much in detail. Activity based costing contain too much information than necessary for an average managers and smaller organization. As a result, managers feel that placing more emphasizes to details is time consuming and may divert company’s attention from other important activities. Fifthly, activity based costing is exposing. Most managers and business executives feel that the accounting approach make it possible to identify slight variations or even mistakes. Visible variations and wastes make the executives uncomfortable. Consequently, they discourage implementations of activity based costing to conceal their inadequacies in their departments especially where adoption is voluntary. Theoretical benefits of Activity Based Costing and why Moonsnail should adopt it. As much as most business organizations find it difficult to adopt activity based costing methods, the advantages of using it outweighs its disadvantages and Moonsnail should adopt it as soon as possible. This will enable Moonsnail to improve it performances and increase control on its finances. The first broad advantage of using activity based costing method is to track costs of all activities in the company (Bragg & Burton 2006). Activity based costing identify all the activities in the company that makes the organization to incur expenses. Cost tracking will help Moonsnail to identify discrepancies that may occur during resource utilization. Therefore, it will prevent employees from diverting company resources for personal use and ensure that resources are effectively utilized in the production processes. Secondly, according to Delaney & Whittington (2009), attention to every activity in the organization makes it possible to cost accurately all products and services produced. Moonsnail will be able to price their products appropriately to avoid making losses. Thirdly, activity based costing provide a strong foundation for future planning (Delaney & Whittington 2009). This is because the cost associated with a product or service can be accurately determined. The management accountant using the method considers other factors that may influence future product cost and prices. The factors include demand and supply of the product, calamities that may affect production of raw materials, government policies such as taxation and many others. According to Delaney & Whittington (2009), activity based costing is an accounting tool for business and process improvement. It is possible to identify wastes and activities that do not add value to the company because it mirrors the way the work is done. It is also possible to identify whether Moonsnail marketing and distribution channels are adding value. Wastes and losses are identified on time and remedial actions are instituted immediately to prevent future problems (Bragg & Burton 2006). The accounting method promotes performance management because it avails information that forms a basis for monitoring and evaluating business performances. Activity based costing enables the company to compare itself with other companies in the same industry. Therefore, it is possible to develop a comprehensive monitoring and evaluation system that make it possible to track and explain all changes that occur in the organizational activities. 4. (a). The strengths and weaknesses of the balance score card as a method of performance management. According to Tyagi and Gupta (2008), balanced scorecard is a management system that guides managers to set, track and achieve important strategic goals and objectives in their companies. The goals and objective are set, implemented and monitored through the four legs of a balanced scorecard. Robert Kaplan and David Norton of the Harvard Business School developed the balanced scorecard in early 1990s. According to Hannabarger et al (2007), the balance scorecard assist business and non-business organization to perform better during the fast changing business environment. A balance scorecard guides the management and other employees in their undertakings. However, it has various disadvantages. Disadvantages The balance scorecard is a first generation scorecard. First generation scorecards fail to include other key metrics that help to measure performance. The balance scorecard does not consider business ethics. Business ethics are important because it promotes humane practices in organization and enhance transparency in business organization. Balance scorecard does not clearly indicate how the goals, strategies and performance indicators are aligned to critical business practices. This is because there are no ways of measuring improvement of various activities in the organization. According to Brown (2007), balance scorecard does not measure improvement in communication in an organization. Furthermore, balance scorecard does not involve the participation of employees who are at the lower ladder. Balance scorecard is a management system meaning that the managers are the only people who use them in the company. Therefore, departments, supervisors and individual contributors in organizations do not have the balance scorecard. Balance scorecard does not consider the health and safety of the worker (Brown 2007). However, learning and innovation cannot be achieved if the employee is not assured of his or her own personal safety. The metrics that balance scorecard utilizes to measure staff turnover and training hours may not be useful. Much more is needed to establish why the employees are performing or not performing well. Finally, according to Hoag & Cooper (2006), the balance scorecard does not take into consideration the other factors that largely influence the performing of the organization. They include macroeconomic environment, regulatory factors, brand image and even the competitors. The balance scorecard does not provide the measurement of profits. It only list indicators of performance and does not specifically state what could be achieved. In addition, the list does not consider important stakeholders of the company such as the shareholders and suppliers. The stakeholders are important for smooth running of the business enterprise. As much as there are disadvantages, balance scorecard has contributed to organization success in various ways. It is becoming popular among the management because of the following reasons. Balance scorecard provides a bigger picture for the company. According to Hoag & Cooper (2006), balance scorecard informs the management that there are four factors that help the organization perform better. It also enables the organization to make better decisions about its operations. Better decisions are made when the company’s management considers various factors before they arrive at their decision. It encourages the management to remain focused and informed on key issues that affect their business. As a result, they are empowered to make useful decision in the organization. The four determinants of organizational success are the finances, internal business processes, customers, and learning and growth. Therefore, the management should consider all the above four determinants and manage them appropriately to make the organization sustainable. First, finances are very important for the organization. Balance scorecard reminds managers that they have to manage their costs and revenues well to develop stable and sustainable financial resource base of the company. This enables the managers to find ways of reducing cost of production and other expenses. It also prompts them to develop innovative ways of generating more cash to the business. Secondly, balance scorecard makes the management to consider its internal activities. Internal activities influence the performance of the business organization (Kaplan and Norton 1996). For example, an organization should use performance contract approach to ensure that their employees are working hard to achieve the objective and goals that are set for them. As a result, employees are able to work appropriately with less supervision. As a result, company’s time would be well utilized and products meet quality specifications. This enables the organization to run smoothly with minimum interruptions thus attain its set objectives. Thirdly, the organization’s management is made to understand that customer is the king. Good customers are essence of a business organization. Therefore, the management should develop guidelines and objectives that help the business to make the customer satisfied. A satisfied customer is a loyal customer. Fourthly, business organization should consider organizational learning and growth as important for sustainability. Organizational learning encourages creativity and innovation in the business organizations (Tyagi & Gupta 2008). Therefore, business organizations are able to develop better strategies of doing their work thus increase the overall productivity of the organization. 4.b The balance scorecard for Moonsnail The figure below shows the balance scorecard for Moonsnail Company. This will enable the organization to set its eyes on the goals and strategies of the organization. Four Legs Objectives Strategy Measures Customer Customer satisfaction Quality products and customer service Client executive contracts specific billing rates Number of customer complains Number of products returned. Number of loyal customers Financial Optimum Cost efficiency Maximum revenue generation Good procurement policies Budgeting and budget control Amount of savings Amount of profits Increasing investments Internal business processes Best business practices Lean manufacturing Improve and leverage quality. Performance based contracts Better Technology Number of rejects Resource quantity used Delays in production Learning and Growth Organization learning Research and development Develop a climate for action Quality Work Force Number of new products developed Skill composition Overcoming the weakness in the balance scorecard The balance scorecard shall not be used in isolation. The company would use balance scorecard as a complementary management method. The company would take into consideration other management tools such as force field analysis, porter’s five forces and others to complement the balance scorecard. . Figure 3 The figure below indicate the balance scorecard of Moonsnail 5. (a). Budget analysis A budget is a written formal financial statement that indicates the activities that the company plans to undertake and their corresponding costs (Grabinski 2007). They are yardsticks to compare actual financial performance to planned financial objectives. It allows to measure departures from are investigated and reasons established (Harvard Business School 2005). The assumptions that Ridgeway considered when making the 2000 Revenues from mail order and retail sales were expected to grow by 50% as compared to those of 1999. Production cost for mail order and retail sales were expected to grow by 50% as compared to those of 1999. Both wholesales revenue and costs declined at the same rate of 17% as compared to 1999. The salaries expenses grew by 100%, advertisement by 125% and utilities by 5%. All other revenues and expenditure of Moonsnail apart from the above were expected to remain constant and identical to the values of 1999. The assumption made for 2000 differ significantly with the actual growth rates experienced in 1999. This indicates that the budgets may be highly flawed. The only consistent growth rates are those of wholesales revenues and cost that reduces at equal rate of 17%. The company needs to find more information about the following activities: Revenues from consignments and miscellaneous as well as expenditures for consignment, miscellaneous costs, salaries, and advertisement and office expenses. This is because the growth rate of the above revenues and cost centre is over 50% as compared to actual growth rates of 1999. As a result, they cause wide budget discrepancies. Others that need to be considered moderately include retail revenues and the cost incurred on retail, rental, shipping and telephone. They indicate discrepancies between 21% and 5% as compared to actual growth rates of 1999. Moonsnail need further information and analyses on the mentioned revenue and cost centers to prevent development of less accurate budgets. They may also considered other external factors such as economic growth rate in the markets in which they operate, the degree of competition as well as the cost of raw materials. 5 (b). How Ridgway could improve the effectiveness of the budget as a method of performance management? Budgets are important but they may cause some in conveniences in the company. Budgets can be viewed as pressure devices imposed by management to the other workers (Bragg & Burton 2006). As a result, it causes internal resistance that results in poor labour relation and inaccurate book keeping. It can also cause departmental conflicts because some departments may feel that budget allocation was unfair and departments may blame themselves for not achieving the set targets. Reconciling personal and corporate goals is not easy because there are problems with responsibility and controlling caused by budgeting. Some costs are under the influence of more than one person (Finkler & McHugh 2008). The cost that cut across departments includes utility costs such as power and electricity. Budgeting may also cause overestimation of costs by various departmental managers and supervisors. However, Moonsnail can overcome the above problems by involving participants to make budgets, establishing standards of performance, seeking feedback constantly from various departments as well as analyzing all cost and revenues. First, Moonsnail should ensure that all the managers and other key employees are involved during budget development. Their participation bring forth some of the key issues that they feel should be addressed in the budget (Delaney& Whittington 2009). Moonsnail management should incorporate ideas of all the members involved and if it is not possible, it should explain to them the difficulties. This creates mutual understanding and prevents conflicts. Secondly, the organization should establish standards for budget performance. It should be clear to the mangers and other people in the company who shall be authorized to make payment to ensure that only activities that bring value to the organization is paid for. In addition, they should not exceed their budgets. Thirdly, Moonsnail should seek feedback constantly from various departments authorized to receive revenues and make payments (Delaney & Whittington 2009). Constant feedback enables Moonsnail to monitor and evaluate budget performances of various departments. As a result, remedial measures are made to correct anomalies at the early stage of discrepancies. Fourthly, Moonsnail should constantly analyze revenues and cost of the company (Pinson 2008). This is done by collecting relevant information and analyzing it. The information includes macroeconomic environment, changing resource prices as well as changes in utility costs. This enables the company to make changes when necessary by adjusting the budget appropriately. 6. An investment analysis of the Lunenburg Soap Company using Net present value and suggested price offer Net present value is an investment analysis technique that helps to determine the value of future investments as compared to the current value. Net present value is an investment appraisal technique that is widely used but it has its own disadvantages. According to Smith (2002), it is it is very difficult to forecast project’s cash flows with accuracy. This is real when the project period extends for many years. Cash flow projections may be affected by factors such as macroeconomic changes and market changes that may reduce or increase company’s revenues. It does not reflect intangible assets that accrue to the company. Net present value techniques are more difficult to compute as compared to other appraisal methods such as pay back period. It uses discounting rates which susceptible to economic and other external factors that may affect the business either positively or negatively. Figure 4a Year Growth rate Revenue Initial Cost 10% working capital Total cost Net Year 1(2000) 0 68844 0 0 41155 27689 Year 2 (2001) 30% 89497 190000 8950 198950 -109452 Year 3(2002) 30% 116347 0 0 69552 46795 Year 4(2003) 20% 139616 0 0 83462 56154 Year 5(2004) 20% 167539 0 0 100155 67384 The above figure shows expected cash flows for the five years. The revenue for 2000 was obtained through the following: The average net profit margin is 40.22 %.( equal to Moonsnail financial statements average net profits margins for 1999 and 1998). 100% represent total revenue. Therefore, it is assumed that the total margin for expenses for the company is 59.78% (100% - 40.22%). Therefore, total cost of $ 41155 (2000 already given) is equivalent to 59.78%. Therefore, total revenue of 2000 = (100% ÷59.78%) × $ 41155= 68844.10 (revenue 2000). Figure 4b Cash flows and net present values (net cash flows from figure 4a) Period Cash flow Interest rate= cost of capital +inflation Period (1+i) (1+i)t NPV= Ct/ (1+i)t Year 1 (2001) $-109452 0.12 0 1.12 1 $-109452 Year 2(2002) $46795 0.14 1 1.14 1.14 $41048 Year 3(2003) $56154 0.16 2 1.16 1.3456 $41732 Year4(2004) $67384 0.18 3 1.18 1.643032 $41012 Net present value           $14340 The above figure shows the Net present value of the investment that Moonsnail would like to invest by purchasing Lunenburg Soap Company. The formula for computing NPV values = NPV= Ct÷ (1+i) t where C is net cash flow, t= period, i= cost of capital + inflation. Net present value for investing in Lunenburg Soap Company is $14340. A positive NPV means that the Moonsnail should purchase Lunenburg Soap Company. This is because Moonsnail will generate wealth of $14340 if it purchases Lunenburg Soap Company. The assumption that has been made in computing the Net present value of Moonsnail are listed below. The initial cost is the buying price of $133,000. This is slightly above that of its competitors to enable Moonsnail be competitive and secure the purchase. The company buys the soap production line worth $30,000 immediately before it starts production. The inflation increases each year by 2%. The cost of capital is 10% and is constant throughout the investment period. The growth of revenues is 30% for period 1 (2001) and period 2 (2002). Both Period 3 (2003) and period 4 (2004) experience a growth rate of 20%. Cost is expected to grow in the same rate as growth in revenues. Moonsnail chooses projects whose net profit margin is equal to the average net profit margin of 1999 and 1998. The net profit margin shall remain constant for the four years at 40.22% Figure 5 Financial ratios for Moonsnail Company Profitability Ratio 1999 1998 Average  gross profit margin 80.75085 79.34864 80.04975 Net profit Margin 43.0605 37.38792 40.22421 It is assumed that Moonsnail will accept the business on condition that it falls between its net profit margin (Moonsnail invest only on projects that yields net profit margin equivalent to its present average net profits). Moonsnail shall not purchase higher than $133,000 because the project have a short term and there are other economic conditions such as change in consumer preferences that may cause lower sales than predicted. As a result, $133,000 is the risk the company is willing to take and beyond it, the company cannot purchase it. References Bragg, S & Burton, J 2006, Accounting and finance for your small business, 2nd ed, John Wiley and Sons, New York. Brown, M 2007, Beyond the balanced scorecard: improving business intelligence with analytics, Productivity Press, Delaney, P& Whittington, R 2009,Wiley CPA Examination Review, Outlines and Study Guides 3rd ed, John Wiley and Sons, New York. Finkler, S & McHugh, M 2008, Budgeting concepts for nurse managers, 4th ed, Elsevier Health Sciences, USA. Hannabarger, C, Buchman, R, Buchman, F & Economy, P 2007, Balanced Scorecard Strategy for Dummies, Wiley Publishing Inc., Indiana. Harvard Business School 2005,The essentials of finance and budgeting, Harvard Business Press, Harvard. Hoag, B & Cooper, C 2006, Managing value-based organizations: its not what you think, Edward Elgar Publishing, London. Kaplan, R and Norton, D 1996, The balanced scorecard: translating strategy into action, Harvard Business Press, Harvard. Kelley, E 2009, Practical Apartment Management, 6th edition. Institute of Real Estate Ma, USA. Michael Grabinski, M 2007, Management methods and tools: practical know-how for students, managers, and consultants, Gabler Verlag, Germany. Pinson, L 2008, Anatomy of a business plan: the step-by-step guide to building your business and securing your companys future, 7th edition, raka associates, USA. Scarlett, R and Scarlett, B 2007, Cima Management Accounting-Performance Evaluation, Butterworth-Heinemann, USA. Tyagi, R & Gupta, P 2008, A Complete and Balanced Service Scorecard: Creating Value Through Sustained Performance Improvement, FT Press, New Jersey. Appendix 1. Shows comparison between the planned growth rate for 2000 and actual growth rate for 1999. Revenue Planned  Growth rates for 2000  Actual Growth rates for1999 Growth rate difference between planned and actual Those having difference rate between + or – 0 to 20 Wholesale sales revenues -17 -17 0 Mail order revenues 50 51 -1 Total revenue 26 11 15 Wholesale sales costs -17 -17 0 Mail order costs 50 50 0 Insurance 0 2 -2 Utilities inc. gas 5 9 -4 Fees 0 -19 19 Bank 0 2 -2 Machine repairs and maintenance 0 7 -7 Travel expenses 0 14 -14 Those having difference rate between + or – 21 to 50 Retail revenues 50 20 30 Retail costs 50 19 31 Total revenue 18 4 14 Rental 0 24 -24 Shipping /post 0 30 -30 Telephone 0 -27 27 Those having difference rate between + or – 51 and above Consignment (revenues) 0 85 -85 Miscellaneous (revenues) 0 -56 56 Miscellaneous (costs) 0 -57 57 Salaries 100 2 98 advertisement 125 -55 180 Consignment (costs) 0 83 -83 Office/ general 0 -61 61 Read More