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Supporting Processes

Special thanks to Geoff Leese

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Support processes

So far we have concentrated on pre sale and post sale processes today we will look at the processes required to support the operation of the business and the information requirements

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Accounting Information

Most obvious information needed to support the running of the business will be the company’s financial position

Derived from its business transactions and used to control Costs vs profits

Information comes from book keeping procedures

Used to improve efficiency and profitability

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Types of accounting

Payroll Cost

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Payroll

Calculate employee’s gross pay Calculate deductions

TaxPension

Calculate net pay Accounting for amounts

deducted from earnings for external bodies

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Documents involved Pay advice Payroll Bank direct credit lists Cheques Deductions analysis Cost analysis End of year documents Audit and control documents Wages records

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Computerised payroll systems

The vast majority of companies either process wages themselves using software such as Sage or outsource to large data processing companies

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Cost accounting

Establishes the idea that organisations activities are accomplished at acceptable costs and that all cost discrepancies are accounted for

Cost expenditures are compared with standards and the differences between actual and standard costs are analysed

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Variance analysis

The difference between the predicted estimated and the actual is termed the variance

Analysis of variances provide management with valuable information for control and planning

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Variance analysis

C a lcu la tin g p ro fit

V o lum es S e llin g p rices

S a les

P riice s Q u an titie s used

M a te ria ls

R a tes o f p ay E ffic ic ie n cy

L a bp ur O verh ea ds(fixe d c io s ts)

C o s ts

P ro fit

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Analysis of cost data

Provides information that helps management decide methods of production and material to use

Need to apportion overheads such as rent and heating between production jobs to predict a realistic selling price

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Marginal costing

Determines the extra cost involved in producing an item above a certain level of production

If the fixed costs have been absorbed a marginal cost tends to be less than the standard cost

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Break-even analysis

Relates turnover to costs Enables management to decide

at what level of turnover the operation becomes profitable and above this level what profit is made

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Budgetary control

Means of controlling expenditure by making forecasts of future expenditure

This enable provisional accounts and costs to be devised so that an advance estimate of the financial situation is available

Departments are expected to conform to their budgets or justify deviations

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Computerised systems

Provide managers with up to date information in a variety of formats to facilitate these support processes

The amount of data required makes it necessary to store information in a digital format to provide forecasts to aid decision making

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Conclusion

This presentation has considered the processes that are used to support the business processes.

Further reading – Wikipedia article on cost accounting

(Nov 08)Link at Business link – Payroll (Nov

08)