2. Executive Summary
The cost centre analysis report has been conducted on the 1st
quarter of the financial year of
2011-2012. There are two main cost centres and such as Surry Hills, Sydney and Brisbane
office. The report has shown the analysis of the 1st
quarter as a whole and the months
individually as well. Most of the purchase cost incurred due to office supplies and most of the
cash disbursement occurred due to fee refund and contractor fee. In the whole quarter Surry
hills had 99% of cash disbursement and Brisbane office had only about 1%. Surry hills had
73% and Brisbane office had 27% of the purchase cost throughout the 1st
quarter.
Recommendations have been provided based upon the analysis and the potential issues raised
during the analysis.
Introduction
The report has been prepared to analyse the cost centre of the transactions of 1st
quarter of 2011
(July- September). The report has been analysed the Purchase Journal, Cash Disbursement etc.
of the 1st quarter taken from Job Activity detail report from MYOB. The report will showcase
a clear view on the cost incurring activities or events and how to control the cost. There has
been a significant use of Microsoft Excel in analysing the report and to make it reasonable.
3. Analysis
There are three main sources, the transactions can be sorted out. They are Cash Disbursement
(CD), Purchase Journal (PJ),
Credit Receipt (CR). For this
report the focus will be on CD and
PJ as they are implicating the cost
incurring transactions. The sum of total CD and PJ for the whole quarter and individual months
is shown in the following table chart.
Purchase Journal: The PJ of the 1st
quarter is showing the cost in two main cost centres, Surry
Hills and Brisbane Office. The pie chart of PJ, quarter 1 is
indicating that, 73% of the cost was incurred in Surry hills and
just about 27% of the cost was incurred in Brisbane office.
Row Labels Count of Src Sum of Debit Sum of Credit
CD 36 8189.9
CR 29 25881.14
PJ 10 2282.33
Grand Total 75 10472.23 25881.14
Jul-11
Row Labels Count of Src Sum of Debit Sum of Credit
CD 24 5517.55
CR 32 23917.57
PJ 2 523.82
Grand Total 58 6041.37 23917.57
Aug-11
Row Labels Count of Src Sum of Debit Sum of Credit
CD 8 3541.2
CR 13 10002.76
Grand Total 21 3541.2 10002.76
Sep-11
Row Labels Count of Src Sum of Debit Sum of Credit
CD 68 17248.65
CR 74 59801.47
PJ 12 2806.15
Grand Total 154 20054.8 59801.47
Quarter 1, 2011
Row Labels Sum of Debit
Brisbane Office 766.26
Surry Hills 2039.89
Grand Total 2806.15
PJ Q1, 2011
4. PJ of July 2011 is showing that
maximum of the cost took place in the
Surry Hills Office.
According to this pie chart PJ in
August, 2011 was $416.28 in Ikea and
$107.54 in Bunnings Warehouse. No
cost of purchase occurred in Brisbane
office.
From the PJ Detail Chart of quarte
1, 2011 it is clear that maximum of
the cost in Surry hills incurred in
Apple Pty Ltd followed by Ikea
and Officeworks due to office
supplies. Maximum cost in the
Brisbane office incurred in Virgin
Blue, due to business travel to
Brisbane.
5. Cash Disbursement: Apart from PJ the other source of expenses is the CD. The following chart
is showing the CD of quarter 1, 2011. It is portraying that the maximum cash disbursement
incurred due to a fee refund of $1636.36 in Surry Hills followed by CPA Membership fee.
There was 1% of CD in
Brisbane office and 99%
was in Surry Hills. In the
month of July CD was
about 2% in Brisbane
office.
1%
99%
CD Q1 -2011
Brisbane Office
Surry Hills
6. Recommendation
The analysis of the CD and PJ transactions raised some potential issues related with excessive
cost. They were- overspending on office supplies, business travel expenses, fee refund and
excessive cash disbursement. Management can consider the following recommendations for
solving these issues-
The reason behind the overspending of office supplies need to be investigated. It has
to be investigated that whether the expense of office supplies is actually generating
the expected revenue. Cheap recycled products can be used as office supplies.
Social media, video conference can be used instead of business travel in case of
meetings and conferences.
There can be a proper audit to investigate the reasons behind the fee refund. Every
fee refund can be recorded with a proper reasoning for the future reference, so there
is no or less repetition of the errors.
Cash disbursement can be handled in an effective way, so the company can invest
somewhere if needed. More payables can be issued to manage the cash flow
smoothly.
There can be cheap outsourcing of contractors from overseas if needed.
Conclusion
This report has shown the cost centre analysis in terms of two different cost centres. If there
can be a proper control over the purchase cost and cash disbursement, the operation of the
company will be more flexible and smooth. The recommendations have tried to showcase the
possibilities of the control of the cost centres.
