1)

Dear sir,

Below you will be able to find the required explanations for the topics that you have provided me with.

Variance Analysis.
 Sales price variance - This is the variance which shows the difference between the budgeted
selling price and the actual selling price of a product, If the variance is favourable then the actual
selling price has been increased than the budgeted selling price, and it will be more profitable to
the company. Here we can observe there is adverse variances for the both almond and peanut
protein bars that means there sales prices has been decreased, The main reason for the peanut
butter prices to decrease is that we have given 20% discounts on the bar because there was a
shortage and as part of a marketing campaign, The reason of the almond bars to decrese in price
is that there is a marketing campaign which is offering 10% discount on the bar. And the cashew
bar is having a favourable variance and it is because that because of the high demand we
decided to increase the price by C$2.
 Sales mix profit variance – This is the variance which is calculated by getting the variance of the
sales units and the n multiply it by standard profit per unit to take the variance in dollars, Here
there is only adverse variance in the peanut butter while almond and cashew bars are having
favourable varinaces of C$ 1 010 221 and C$ 655 532, The adverse variance in the the peanut
butter was inted to sell 670 000 units but we only could sold 201 000 units so that is the reason
for the adverse variance of peanut butter. But in the other hand out other products almond and
cashew has been sold more than the budgeted amount and even the almond PB’s price
decreased still we have a favourable variance in sale mix profir variance and the cashew PB is
being sold the higest extra amount.
 Sales mix quantity variance – This variance shows the difference between the actual sales and
the budgeted sales in dollars, In this variance all of our PB are hving adverse variances because
our more profitable peanut PB was sold less than the budgeted amount and the less profitable
almond and the cashew PB exceeded the budgeted sales , This is the reason affecting the
adverse variances for the bars and because we have solved the issue of the peanut butter I think
in the next variance analaysis the variances will be favourable.

Benefits of planning and Production variances.

 Can easily identify the value of the both variances and for which products the varinaces has
been occurred, In the peanut bars section we can divide it in taste wise.
 Because our PB are produced by natural ingredients prices could be varied more frequently so it
will be convenient to make another budget following the differences of the prices as the
operation budget.
 The every manager is not being held responsible for the every variance occur in the products of
ours and because of that the managers can identify only their sections thst need to improve.
 Managers will be more motivated because when there is a planning budget because of some
external factors managers could not contro the variances so by having an operation budget they
can involve and adjust the budget.

KPI.

 To accurately forecast the future demand for the products – The market for the protein bars is
a competive market with many competitors, In order to survive in the market we the personal
best need to identify the future market demand to plan the budget for the upcoming year. We
are using incremental budget so by using the forecast of the demand for the upcoming year we
can make a budget for the year, The website will provide the number of order and how the
people checked in the product but not purchased it, These type of big data will help the
forecasting process.
 How the sales from the website has progressed – The website is currently pumping out nearly
40% of the total sales of the personal best,So we need to retain the current sales percentage
and should work in order to further increase the number of sales from the website, To do that
the website needed to be more popular and more appealing to attract new customers and the
customer who only checks the products should be motivated to purchase the proten products.
Website is a way of selling without any 3 rd parties so the pure profit will be ours because of
that we need to develop our website sales.
 The data analysis should be done in a professional manner – The data which is collected through
the website of ours is basically data about the fitness and health batterns of our customers and
these type of information will have a huge impact on the customers personal lives. As a
responsible company we have to ensure that the customers data will not be misused and will
not be carelessly handled and we should obey the rules andregulations about using customer
data in order to take decions, So we need to be informed and aware about the methods and
hpw to carefull handle the customers data.
2)
Dear sir,

Below you will able to find the relevant explanations for your topics that you have given me.

Rolling budget.
Advantages.

 Rolling budget will be analyzing the data for the period and it will create the budget for he
upcoming next year – The budget will be prepeared for the month of the corresponding next
year and this will ensure that the monthly budget will be always prepeared when the period
starts.
 Rolling budget is more updated and it will show more correct data than the incremental budget
– The rolling budget is preperared monthly so it will have more updated and new data in order
to create the budget for the required period.
 More information will be show in the rolling budget – Because the budget is prepeared monthly
the managers can focus on month wise information that is needed for the decion taking of the
company.
 Not need to wait and the budget will not be delayed – Because the budget is being prepeared
early there will be no waiting time for the budget otherwise there will be delays and the whole
organizations production process will be delayed.

Disadvantages.

 Rolling budget will need more information than the incremental budget – The rolling budget Is
prepearing momthly and focusing on different areas so the budget will need more information
than the incremental budget and this could be time consuming and costly.
 Rolling budget need more time to prepeare – Because of the complexity of the information the
rolling budget will need more time in order to be processed.
 More man power is needed to prepeare the rolling budget so the managers time will be highly
consumed in rolling budgets – The managers are the party who is prepearingthe budget so when
their schedule is tight with prepearing the budget the day to day activities will be postponed.
Forecasting.
Explanation on the attached tables.

Time series analysys – This is the analysys that is done in the company called fitness king and this
producer also have similar organization charachteristics as the personal best and 3 years of data has
been collected in order to prepeare the specific tables.

Time series analaysis on meeland sales.

This is a table that showing the total market time series analysis on the sales in the meeland and this
table also contains 3 years from 2020.

In this table we can observe the sales revenue of the market is being stated and the trend sales also
being represented and the seasonal variations are the difference between the trend and the sales
revenue which is being caused by the seasonal variations which are uncontrollable by the businesses
and organizations should produce the product by obaying the variations.

Its clear that until 3 rd quator in 2020 the market was behind the trend sales revenue and only in the
quarter 4 they have able to exceed the trend sales revenue.

But in 2021 the trend sales is decreased and this caused the seasonal variations to be more positive and
only in quarter 1 there is a negative value while all the other quarters have positive values.

In 2022 Again the seasonal variantions are showing negative values but the trend sales also have been
decreased comparative to the previous year so here the producers had the advantage to produce more
than the trend but the market underproduces and the sales revenue was lower than the trend sales. In
2022 only the quarter 4 has a huge improvement other than the the variances are all negative.

According to the time series analysys the market is underproducing than the trend sales and it is not
good for the market because the sales revenue is low and low revenue means low profits and that will
lead the organizations to close because all of the organizations are profit motive.

Linear regression equation.

When using this formula we can identify the melands quarterly trends for the past years by including the
number of the period in the X so from 2020 to 2023 we can get the trend revenue. This method is a
alternative method to calculate the variations,

After calculating the trend for the specific quarter the new have to take the time series for the specific
quarter of the meland and divide the time series by the trend then we can have the variation as the
answer for the specific quarter of the meland.

If we need to calculate the variation of the quarter 4 of the years,

Y = 81244 + (-1326*x)

Trend Q4 = C$ 75940
Trend Q8 = C$ 70636

Trend Q12 = C$ 65332

And the we have to divide the Time series by the trend revenue,

Seasonal variance = TS/T

Avg seasonal variance = (1.20+1.37+1.14)/3

= 1.23

As per the linear regression equation the avg seasonal variance for the quarter 4 of the every is 1.23

Seasonal variation.

In this table tit shows the total seasonal variations for the 4 quarters of the fitness king in the meeland
for the 3 years from 2020,

Here we can observe that the avg seasonal variation of the quarter 2 and the quarter 4 are the only
positive variations whle the quarter 1 and 3 are having the negative variants.

Is calculation of seasonal variation on additive model is appropriate?

The additive model is only appropriate in the business which has low level of seasonal variations an if
the seasonal variations are more fluctuative then it is the best option to choose the multiplicative
model.

In the market of meeland we can observe there is big fluctuations of the seasonal variations when
considering the average seasonal variations like the variation from the quarter 1 to 2 it C$ 18746 that Is
a huge fluctuation for a seasonal variance, So a dynamic business environment like the protein food
products in the meeland personal best should consider using the multiplicative model.

Limitations of time series analysis.

 The trend growth is not steady – The trend of the market is not a constant number it will always
change as per the time goes on so we cannot predict a exact amount of trend for the period, this
will cause the forecast to be more unreliable.
 Random variations - The variations that can occur from time to time will cause the forecasting
to be more inefficient. In that case we have to make sure that if the change is happened because
of an internal problem or if it is because of a one off production in the company at that time and
if it is a one off order then we have to observe the other years and take a suitable predicted
value to the respective quarter or the month. Because of this predictions the output will be less
efficient.
 The business environment is not steady – It is common that because of there are many firms in
the market the market is constantly changing and the government is also imposing different
 policies and different rules in order to control some aspects of the market sometimes these
uncontrollable external factors will cause the variations of the organization.
 Size of the data sample – This is a crucial factor in forecasting the future demand because the
validity and the efficiency of the output is being meashured by the volume of the input data ort
the data available to analyse in this scenario the data is only from 3 years and it is way too small
quantity for the situation because we are going to trade in a froreighn market with no
knowledge about the market and we need to be more knowledgable about the future demand
because the expansion will be not work unless we have correct forecastrings to make the
budgets for the future period.

I think my explanations are useful to you sir.

Thank you,

Financial officer.
3)
Dear sir,

Below you will find the required explanations for the topics you have given me.

Lease.
The finance director of the personal best has decded to replace the roasting ovens of the peanut butter
production plant, The machine is being purchased on the base of lease agreement and here is the way
how it will be interpreted in the financial statements.

First we need to identify the lease liability and the right of use asset.

The lease liability can be identified by adding the fixed payment over the lease term which is C$ 300 000
annuallyand the bank interest of 6%.

Then we need to identify the right of use asset and we can add the initial recongnition cost and the
expencess of C$ 7000 for the obtaining of lease.

Then the annual lease payment is calculated and it will be cr to the lease payable account and the
payment for the lease will be dr to the account while the cash account cr the relevant account.

The new need to identify the current liability and non current liability for the lease liability and we can
record the values in the financial statements.

Costing methods.
How the costing process would change.

The current costing method at the personal best is the standard absorbtion costing method which is
allocating the costs to the production departments straightly,

In the ABC the difference is that if the depaertments not being worked then the costs are not being
allocated to those departments and it will be fair for the managers in order to show the profits from the
department otherwise if they did not worked the cost will automatically also alocate on them,

If there was unused space on the production facility of the peanut butter plant and if the floor rent is
being allocated based on the floor area to the all departments then it will be unfair because the floor
area on the peanut butter plant is not being used.

Advantages of using ABC.

 Can identify the costs fairly among the production departments – Because the costs are being
only allocated to the production departments that have been responsible for the certain costs
 the costs will be divided in a fair manner that the departments which are not involved in the
production or the departments that are not responsible for the specific costs will not be
allocated the cost.
 Easily identify the cost drivers – The drivers of the costs can be easily identified because that the
costs are being categorized based on the cost drivers and it will show what are the drivers that
driven the cost and what are the departments that have been responsible for the costs of the
period.
 The responsible accounting is become easier – The cost allocation is done based on the cost
drivers and this will separate the departments which are not involved in costs so this will able
the managers in the respective departments to allocate the relevant costs to their department
and to analyze how and why the costs are generated in case of excessive costs has been created
in a certain department.

Disadvantages.

 More time consuming than the absorption costing - The process for the ABC is more
complecated than the absorbtion costing itself and because of this themanagers will not be able
to ficus on the other works and this will cause a delay on the overall process of the personal
best. Because there are only four manufacturing departments this will not be a issue in
allocating costs.
 Will need more information and analyzing from the management -This method is more resource
demanding than the absorption costing because we need to identify the cost drivers and the
costs for the cost pool and we need to correctly absorbe the costs based on the cost drivers. So
this is a lot of work and will require more information on the production process and this will
also make the managers more involved in costing than the day to day managerial works of the
personal bes, And the personal best is still in the development stage the costing should be
simple.
 When the busoness is small not suitable – The personal best is not comprised with 4 production
departments and only 110 employees in the production departments all together so this can be
identified as a small production operation, Because of that if the costing method was too
complex it will not be easy to understand the costing to the other employees , So the costing
should be developed with the organization.

Application of ABC to the personal best.

Personal best is a company which is still in the developing stage and generating good revenue
throughout from the start of the company, Bu t the costing method will be dependedning on the scope
of the production of the certain company and it will raise a concern about the complexity and
understandability of the costing method because if it is not then the employees will be not able to take
the correct actions in order to cut the addition costs and to adjust the working cycle if they are under
performing.

Personal best is currently using the absrobtion method which is quite straightforward and it is way more
simpler than the ABC which includes in analyzing the costs using the cost drivers which is detailed as,
 - Identifying the relevnt activites of the production departments.
- Identify the costs that are incurred by the activities and prepeare a cost pool.
- Identify the cost drivers for the relevnt activities.
- Identify the quantity of the identified cost drivers.
- Allocate the costs to the cost driver based on the number .
- Calculate the overhead abdsorbtion rate.

We need to identify the activities that our each production department is being doing, In the peanut
butter production we need to find how do the cost of the production process is being driven by the
activities.

After recognizing the activities we need to identify the costs that has been generating by the certain
production activities that we have been discovered and we need to add all the costs and need to
prepeare a cost pool.

The new need to identify the individual cost drivers of the activites which helped the cost of the
acitivites to generate.

Then we need to fond what is the frequency or the nuber of time that each cost driver has been
occurred.

After that we can divide the cost pool between the cost drivers as per the frequency of that drivers has
been occurred.

Then the cost drivers will be used to calculate the OAR for the departments and then the costs will be
absorbed on those basis.

I hope my explanation is sufficient for your requirmnets,

Thank You,

Finance officer.
4)
Dear sir,

Below you will able to find the relevant eexplanations on the topics that you have requested.

Automation.
The decion to use the robotic packing machine for the packing of the produxts of the personal best is a
decion taken by the management and we need to identify what is the number of the machines that we
will need to pack the products with the demand for the products and when analyzing the payoff tables
we can arrive in to decions according to the nature of risk tolerance of the managers,

If a manager is being risk averse then they will use the min max approach

And a manager is risk seeker then they will use the maxi max approach

If the manager were risk neutral they will consider the opportunity cost and choose the min max regret
approach.

When considering the table 1 we can identify the both min max and maxi max decions for the number of
packing robots needed for the process,

MINMAX – Here the manager will definitely choose the monthly demand 200 and 4 robot packer option
which is has the highest number from the lowest decions for the each uncontrollable scenario in the
table.

MAXI MAX- Here the manager will select the maximum value decion from the decions of each
uncontrollable scenarios, and they will go with the 400 monthly boxes and 4 robot packers to be
launched in order to satisfy the demand.

MINMAX regeret – Here the manager will choose the lowest opportunity cost and therefore they will
choose the 100 monthly boxes and 2 robot machines for the facility.

Pros of using expected values.

 The uncertainity will be interpreted as a single number – If there were different values for
different decions for the uncertainity trhen the decion taking will be more complex, But when
using the expected values the decions making process will be way more easier because of one
number is easy for making decions.
 The output is being generated by considering the every possible outcomes probability and this
will able to provide a output regarding to every input that we have entered in to the formulae.
 The calculations of the expected values are being easy and simple because we have to multiply
rthe values by the respective probability to get the expenceted values.
 Cons of expected values.

 When taking decions in an organization the decion should be taken by analyzing many
information and data collected, So making a decion from a single digit will sometimes end
up providing incorrect decions for the company and which willcause the compnsny to take
wromg decions.
 Probanility is a assumption and managerial decions should take based on real dat a and
information to proof the validity of the decions that has been taken by the management,
The probabilities will be dpendents on certain set of information and if the probabilities
were wrog then the whole process will be over.
 The stake holders will information about the decions and they cannot be provided with a
simple calculation so to present to the public and the dtake holders the frcion taking
methods should be shown to the public and the stake holders.

How to determine the value of the perfect information.

- First we need to identify the value without information of the relevant decision.
- Then we can choose the maximum values of the each uncontrollable decion and then take the
expected values of those and add together.
- Then deduct that from the value without information then the answer will be the value with
information.

How to handle redundancies in an ethical manner.

- Ensure that the redundancys are being made because of reasonable financial reasons or it is a
required decion to ensure the production of the company moves forward.
- Provide mental support and financial support for the employees who are in need and make sure
that the redundancy will not causing the employees mental or the family life to be unstable.
- Inform and communicate clearly and give the employees time to adjust to the change and
address the issues of the employees about the decion.
- Time the redundancy for the correct period of the company is crucial if the employees have
been left then if there were a big demand for the products there will be a problem so we need
to consider the time frame which the redundancy is being done.

I think my explanatins will help you sir,

Thank you.

Financial officer.