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Qualitative information is individual narrative reports of experiences. It deals with descriptions and it can be observed but not measured like quantitative information. Qualitative information is gathered with methods that are personal, direct, and open-ended, with minimal constraints on what the answers to the questions may be. These methods include personal interviews, case studies, formal focus groups, participant observation etc. Qualitative information can enrich and enliven evaluations with reports of common individual experiences. Qualitative information gives subjective interpretation and opinions and personal experiences. (e.g. a user's report on how easy a spread sheet is to use, or how user-friendly an operating system is.) Some things, such as emotions, opinions, human reactions cannot be measured objectively, so qualitative methods such as interviews are used.
Businesses use financial and non-financial information to manage their operations. Managers create reports which share performance information in terms of financial data as well as non-financial data. Managers and business owners must understand the meaning of both types of information and the impact each holds on the business. Financial information is data such as credit card numbers, account balances or other monetary facts that include in the statement of comprehensive income and balance sheet.
Non-financial information is data which is relate with non-monetary information about objective, activities of company.
There are differences between financial and non-financial information:
Marketing consists of creating new products and finding customers for those products. The marketing department in a business gathers both financial and non financial information to use for planning its marketing strategy. Financial marketing information involves sales dollars stopped by industry and product. Non-financial marketing information consists of buyer demographics and regional preferences.
Managers work with employees to set goals for upcoming periods. A good set of goals includes both financial and nonfinancial goals for the employee to work toward. Effective goals include goals which are achievable by the employee. Financial goals for a sales manager may include increasing the sales dollars in a particular product line or reducing the travel expenses incurred by the salespeople. Non-financial goals for a department manager may include reducing the number of overtime hours or reducing the number of machine downtime hours.
The Public Bank journey began in 1966, when its Founder and Chairman, Tan Sri Dato' Sri Dr. Teh Hong Piow established Public Bank and conceived it as a bank for the public. Public Bank Group is the third largest banking group in Malaysia by asset size, with total assets of RM249 billion as at the end of 2011. Among banking groups in Southeast Asia, the Group ranked number six by asset size as at the end of September 2011.
The nature of business of Public Bank Berhad is banking and finance services. From providing retail and commercial banking services at its inception, the Public Bank Group has developed into a full service financial services group providing a wide range of services covering, amongst others, personal banking, commercial banking, Islamic banking, investment banking, share broking, trustee services, nominee services, sales and management of unit trust funds, bancassurance and general insurance products.
Last line in income statement is to show the profit or loss for the period reported and earnings per share. Stockholders of Public Bank use earning-per-share ratio to provide information to determine the cash available for dividend payouts. In 2011, the profit before tax of Public Bank Bhd. is RM4.61 billion increase as much as RM0.53 billion compare to 2010. The profit before tax increase 11.5% from year 2010 to year 2011. Total assets grew by RM23.08 billion (10.2%) for the year 2011. Investors and lenders of Public Bank require balance sheet for liquidity information to determine a company's ability to pay debt. The loan growth is 13.5% in year 2011. The net return on equity ratio decrease 0.3% from 2010 to 2011.
The mission of Public Bank Berhad is to sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia. The vision of Public Bank is to be ranked among the top 100 banks in the world while the mission of Public Bank is to sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia. Besides, there are four categories of objectives in Public Bank which are objectives for customers, objectives for employees, objectives for shareholders and also objectives for community.
AirAsia Berhad (AirAsia) is engaged in providing air transportation services. Asia's leading airline was established with the dream of making flying possible for everyone. Since 2001, AirAsia has swiftly broken travel norms around the globe and has risen to become the world's best. With a route network that spans through to over 20 countries, AirAsia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with our associate companies, AirAsia X, Thai AirAsia, Indonesia AirAsia, Philippines' AirAsia Inc and AirAsia Japan.
In year 2011, profit before tax had drop to RM 777,017 which decrease almost RM330,000 compared to 2010. It almost dropped 43% of profit. The current ratio for the year 2011 is 1.7 : 1 which do not reach the ideal ratio (2 : 1). However, if compare to year 2010, the current ratio in 2011 is better because the current ratio is 1.6 : 1. Although the profit drop 43% but it doesn't affect the cash flow. The net increases in cash flow in 2011 not much affected by the profit. The liquidity of company is very stable
The missions of Air Asia Bhd are (i) to be the best company for work for; (ii) globally recognized ASEAN brand; (iii) attain lowest cost; (iv) maintain highest quality, embracing technology to reduce cost. The vision is to be largest low cost airline in Asia and serving 3 billion people. "Now Everyone Can Fly".AirAsia's vision is to continue to be the lowest cost short-haul airline in every market we serve, delivering strong organic growth through offering the lowest airfares at a profit.
IJM Corporation Berhad is an internationally competitive Malaysian conglomerate with businesses in construction, properties, industries, plantations and infrastructure. IJM is one of Malaysia's leading construction groups and is listed on the main market of Bursa Malaysia Securities Berhad. Its core business activities encompass construction, property development, manufacturing and quarrying, infrastructure concessions and plantations.
The 2012 profit before tax for IJM Corporation Bhd. is RM801,591 which increase about RM140,000 compared to 2011. It due to the operating revenue of company increase almost RM700,000. Therefore, the income tax expenses increase 20%. The distribution of profit to owner increase RM100,000. The earnings per share for net profit also increase almost RM7 to RM29.84. The current ratio of IJM Corporation Bhd is 2.2 : 1. It reached the ideal ratio which shows that the current assets able to cover all the current liabilities without liquidity problem.
The vision of IJM Corporate Bhd is to become a leading Malaysian conglomerate in the markets; Mission is to deliver sustainable value to stakeholder. There are a set of core values which is integrity, passion, efficiency, teamwork, respect for diversity, innovation, customer focus and quality. With proper vision, mission and core value, it able to lead company achieve their target and become successful in the future.
Question 2 :
Budgetary slack - The difference between the minimum necessary costs and the costs built into the budget or actually incurred. Budgetary slackÂ is when the people involved in creating aÂ budgetÂ deliberately under-estimate the amount ofÂ revenueÂ to be generated, or over-estimate the amount ofÂ expensesÂ during the budget period. This allows them a much better chance of "making their numbers," which is particularly important for them if performance appraisals and bonuses are tied to the budget.
Goal Congruence - The term goal congruence is applied to an organization to insure that all its operations and activities are set up in support of the organization's goals. This means that the organization will review all its operations and activities to insure that none of them (those operations and activities) work in a way that limits or inhibits the organization's ability to reach its goals, whatever they may be.
Feedback - Describe the process of transmitting information about actual results to the people who are responsible for comparing them against a budget or standard, and initiating control action if required. There are two types of feedback, single loop feedback and double loop feedback.
Feed forward -Â is a management and communication term, which refers to giving aÂ controlÂ impact in a downlink to a subordinate to a person or an organization from which you are expecting an output. A feed forward is not just a pre-feedback, as a feedback is always based on measuring an output and sending respective feedback. A pre-feedback given without measurement of output may be understood as a confirmation or just an acknowledgment of control command.
Aspiration level - relates to the personal goal of the budgetee (the person who responsible for the budget). In other words, it is the level of performance that they hope to attain.
Through motivation and participation in budgeting, major dysfunctional effect of budgeting could be avoided.
Motivation defines as the need to achieve some selected goal and the resulting drive that influences action toward that goal. Motivation is what makes people behave in the way that they do.
Participation in budgeting process will improve motivation and improve the quality of budget decisions and the efforts of individuals to achieve their budget targets. When individuals participate in decision making, they will be more satisfied with their job and more productive. There are two ways can be set : imposed budget and participatory budget.
Imposed style of budgeting is top management prepare a budget with little or no input from operating personnel which is then imposed upon the employees who have to work to the budgeted figures.
Participative style of budgeting is developed by lower-level managers, on the basis of what they think is achievable and the resources they need, and then submitted for approval to their superiors. Allowing individuals to participate has several advantages.
First, individuals are more likely to accept the target and be committed to achieving them if they involved. This could make goal congruence between individuals and the target then achieve goal.
Second, participation can reduce the information gap when standards are imposed from above. Subordinate have more information than their superiors on the relationships between output and input. When using participation, feedback control can make superior monitoring output and taking corrective action if necessary.
Lastly, imposed standards can encourage negative attitudes and result in demotivation and alienation such as budgetary slack behaviour.
Classification of costs is the grouping of costs according to their common characteristics. There are many classifications of costs for planning, control, performance evaluation and decision making. The example will be based on a Company WKH Sdn. Bhd., Furniture Company.
Firstly, there is cost classification by nature means that an analysis based on the nature of costs. Such costs are classified into direct material, direct labour and other expenses. Direct Material is a necessary to make complete of the finished product. For example, woods for making furniture. Direct labour is work directly involved in making the product such as labour for production of making chairs while other expenses which is indirect material, indirect labour and production overhead such as maintenance of machines, supervisor's pay, depreciation of fixed asset and more.
Definition of classification by function is when an analysis is based on the function of the event such as production costs, administrative expenses, selling and distribution costs, finance costs, and research and development costs. The records can provide more relevant information to users, the allocation of costs to function. Organisation who chose to pick this method should disclose additional information on the nature of expenses include depreciation and staff costs while the enterprise should pick the analysis that provides the fairest presentation of the business activities.
Thirdly, according to identifiably costs divided into direct cost and indirect cost. Direct cost is cost that can be traced in full to the product or service that is being cost. For example, salaries of direct labour, travel of direct labour from and to work, direct materials, direct supplies and more. The indirect cost is cost that is not classified as direct such as salaries of administrative, office equipment, telephone bill and more.
According to behaviour is the way in which costs of output are affected by fluctuation in the level of activity such as fixed cost, variable cost and semi-variable cost. Fixed cost is a cost that remains constant in total, despite the change in level of activity within relevant range such as office rent while variable cost is changes in total in direct proportion to change in the level of activity such as different prices of similar products. Semi-variable cost is cost that involves fixed cost and variable cost component like utilities.
Figure 1: Fixed cost.
Figure 2: Variable cost.
Figure 3: Semi-variable costs
Next, association with product is also a classification of costs which is product costs and period costs. Product costs are the cost of goods manufactured or purchase for resale. They include direct cost, direct labour, factory wages and more. Period costs are all the non-product costs in the organisation and not keeping as inventories but are expenses as time passes such as administrative expenses, selling and distribution.
Furthermore, according to controllability divided into two categories which are controllable costs and uncontrollable costs. Controllable costs are costs that are influenced by the decision or actions of a manager. For example, expenses for advertising for furniture of Company WKH. Uncontrollable costs are costs that are not influenced by the decisions or action of a manager such as utility cost for making the furniture.
According to basis of normality is divided into two categories which are normal cost and abnormal cost. Normal cost is the cost normally incurred at a given level of output such as cost of production in making the furniture while abnormal cost is the cost which is not normally incurred at a given level of output. These costs will not be charged in costs of production but transferred to the costing profit and loss account for the company.
According to basis of time is classified as historical costs and pre-determined cost. Historical costs are the value of a resource given up or a liability incurred to acquire an asset or service at the time when the resource was given up. For example, 100 units of chairs were purchased one month back for RM10 per unit and price today is RM11 per unit. The inventory balance sheet will record down at RM1, 000 but not RM1, 100. Another cost classification for historical cost is sunk costs which is costs that have been incurred in the past and cannot be changed by future action. Pre-determined costs are estimated costs which are set in advance on a scientific way. It becomes standard cost and compared with the actual for adopting controlling measures. For example, predetermined overhead rate which is equals to estimated total manufacturing overhead cost divided by estimated total units in the allocation base of the company.
Lastly, there is relevant cost and irrelevant cost according to basis of relevance. Relevant is a future cash flow as a direct consequence of a decision such as future costs, cash flows and incremental costs of the company. Other terms used to describe relevant cost is avoidable cost and differential cost. Avoidable cost is costs which would not be incurred if the activity to which they relate did not exist. For example, a company deciding whether or not to discontinue a product, only cost would be saved is avoidable cost. Irrelevant cost is they are not future cash flows which will be incurred, regardless of the decision that is taken. For example, there are sunk cost and historical cost incurred in the company.