The document discusses operational auditing and concepts related to evaluating organizational effectiveness and efficiency. It defines operational auditing as evaluating the effectiveness and/or efficiency of operations, with effectiveness referring to accomplishing objectives and efficiency meaning reducing costs without reducing effectiveness. Economy is defined as maximizing the use of limited resources to achieve goals. Examples of types of inefficiency include acquiring goods and services too costly, lack of bids for purchases, raw materials not being available when needed, duplication of employee efforts, and work being done that serves no purpose.
Learning Objectives:
Determine the break-even point and output to achieve target operating income
Incorporate income tax considerations into CVP analysis
Determine and explain operating leverage
Draw the breakeven graph and the cost-volume-profit graph
Learning Objectives:
Determine the break-even point and output to achieve target operating income
Incorporate income tax considerations into CVP analysis
Determine and explain operating leverage
Draw the breakeven graph and the cost-volume-profit graph
Cost management is the process of estimating, allocating, and controlling the costs in a project. It allows a business to predict coming expenses in order to reduce the chances of it going over budget.
Projected costs are calculated during the planning phase of a project and must be approved before work begins.
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This is a template/ format used to define the attributes data of an Activity in Project Management.
The format is used for activity collections like processors, successors, activity durations, resources etc.
This is from Applica Consultancy.
Dhawal Thakkar
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Licensing for Real Estate Agents under RERA in India, procedures, documentation, fees and requisites. How to get and which authority will give, all the answers in the PPT.
Monte Carl Simulation is a powerful and effective tool when used properly helps to navigate the expected Net Present Value NPV. This presentation helps to improve the pattern to ackowlege onthe Odessa Investment by Decision Dres.
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the document is on Cost volume profit analysis.
(Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income.)
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
2. Determining Funds Requirements
and Profitability
Projected Statement of Comprehensive
Income
Operating cost ratios (i.e. COS, SAE, to Sale)
Projected Statement of Financial Position
Projected Cash Flow Statement
- to evaluate the economic viability of the project and its
financial requirements, the following statement may be prepared
4. Number of Local Calls
MonthlyBasic
TelephoneBill
Total fixed costs remain unchanged
when activity changes.
Your monthly basic
telephone bill probably
does not change when
you make more local calls.
Total Fixed Cost
5. Number of Local Calls
MonthlyBasicTelephone
BillperLocalCall
Fixed costs per unit decline
as activity increases.
Your average cost per
local call decreases as
more local calls are made.
Total Fixed Cost
8. Summary of Variable and Fixed Cost Behavior
Cost In Total Per Unit
Variable
Changes as activity level
changes.
Remains the same over wide
ranges of activity.
Fixed
Remains the same even
when activity level changes.
Dereases as activity level
increases.
Cost Behavior Summary
9. Mixed costs contain a fixed portion that is incurred
even when facility is unused, and a variable
portion that increases with usage.
Example: monthly electric utility charge
Fixed service fee
Variable charge per
kilowatt hour used
Mixed Costs
11. The break-even point (expressed in units of product or
dollars of sales) is the unique sales level at which a
company neither earns a profit nor incurs a loss.
Computing Break-Even Point
12. Prior to calculating the BEP, the following
assumptions should be observed:
1. Production costs are function of the volume of
production or of sales (e.g. utilization of equipment)
2. Volume of production equals volume of sales
3. Fixed operating costs are the same for every
volume of production
4. Variable unit cost vary in proportion to the volume
of production
5. Unit sale price for a product or product mix are the
same for all levels of output (sales) overtime. The
sales value is therefore a linear function of the
units sales prices and the quantity sold
13. Prior to calculating the BEP, the following
assumptions should be observed:
6. Data from normal year of operation should be
taken
7. The level of unit sale prices, variables and
fixed operating costs remain constant
8. Single product is manufactured or, if several
similar ones are produced, the mix should be
convertible into a single product
9. Product mix should remain the same overtime
14. Contribution margin is amount by which revenue exceeds the variable
costs of producing the revenue.
Total Unit
Sales Revenue (2,000 units) 100,000$ 50$
Less: Variable costs 60,000 30
Contribution margin 40,000$ 20$
Less: Fixed costs 30,000
Operating income 10,000$
Computing Break-Even Point
15. How much contribution margin must this company have to cover its
fixed costs (break even)?
Total Unit
Sales Revenue (2,000 units) 100,000$ 50$
Less: Variable costs 60,000 30
Contribution margin 40,000$ 20$
Less: Fixed costs 30,000
Operating income 10,000$
Computing Break-Even Point
16. How many units must this company sell to cover its fixed costs
(break even)?
Total Unit
Sales Revenue (2,000 units) 100,000$ 50$
Less: Variable costs 60,000 30
Contribution margin 40,000$ 20$
Less: Fixed costs 30,000
Operating income 10,000$
Computing Break-Even Point
17. We have just seen one of the basic CVP relationships – the
break-even computation.
Break-even point in units =
Fixed costs
Contribution margin per unit
Unit sales price less unit variable cost
($20 in previous example)
Formula for Computing
Break-Even Sales (in Units)
18. The break-even formula may also be expressed in sales
dollars.
Break-even point in dollars =
Fixed costs
Contribution margin ratio
Unit sales price
Unit variable cost
Formula for Computing
Break-Even Sales (in Dollars)
19. ABC Co. sells product XYZ at $5.00 per unit. If fixed costs are
$200,000 and variable costs are $3.00 per unit, how many
units must be sold to break even?
a. 100,000 units
b. 40,000 units
c. 200,000 units
d. 66,667 units
Computing Break-Even Sales
Question 1
20. Use the contribution margin ratio formula to determine the amount
of sales revenue ABC must have to break even. All information
remains unchanged: fixed costs are $200,000; unit sales price is
$5.00; and unit variable cost is $3.00.
a. $200,000
b. $300,000
c. $400,000
d. $500,000
Computing Break-Even Sales
Question 2
21. Volume in Units
CostsandRevenue
inDollars
Revenue
Starting at the origin, draw the total revenue
line with a slope equal to the unit sales price.
Total fixed cost
Total fixed cost
extends horizontally
from the vertical axis.
Preparing a CVP Graph
22. Total cost
Volume in Units
CostsandRevenue
inDollars
Total fixed cost
Break-even
Point
Profit
Loss
Draw the total cost line with a slope
equal to the unit variable cost.
Revenue
Preparing a CVP Graph
23. Break-even formulas may be adjusted to show the sales volume
needed to earn
any amount of operating income.
Unit sales =
Fixed costs + Target income
Contribution margin per unit
Dollar sales =
Fixed costs + Target income
Contribution margin ratio
Computing Sales Needed to Achieve
Target Operating Income
24. ABC Co. sells product XYZ at $5.00 per unit. If fixed costs are
$200,000 and variable costs are $3.00 per unit, how many
units must be sold to earn operating income of $40,000?
a. 100,000 units
b. 120,000 units
c. 80,000 units
d. 200,000 units
Computing Sales Needed to Achieve
Target Operating Income
25. Margin of safety is the amount by which sales may decline before
reaching break-even sales:
Margin of safety provides a quick means of estimating operating income
at any level of sales:
Margin of safety = Actual sales - Break-even sales
Operating Margin Contribution
Income of safety margin ratio= ×
What is our Margin of Safety?
26. Oxco’s contribution margin ratio is 40 percent. If sales are $100,000
and break-even sales are $80,000, what is operating income?
Operating Margin Contribution
Income of safety margin ratio
= ×
Operating
Income = $20,000 × .40 = $8,000
What is our Margin of Safety?
27. Once break-even is reached, every additional dollar of contribution
margin becomes operating income:
Oxco expects sales to increase by $15,000. How much will operating
income increase?
Change in
operating income = $15,000 × .40 = $6,000
Change in Change in Contribution
operating income sales volume margin ratio= ×
What Change in Operating Income Do We
Anticipate?
52. Operational audits
- also known as management audits and
performance audits, are conducted to
evaluate the effectiveness and/or efficiency of
operations.
53. Effectiveness refers to the accomplishment
of objectives
Efficiency is defined as reducing costs
without reducing effectiveness
Effectiveness Versus Efficiency
54. Economy
refers to an entity's success in maximizing the
use of its limited resources to achieve its
goals and objectives.
55. Types of Inefficiency Example
Acquisition of goods and
services is too costly
Bids for purchases of
materials are not required
Raw materials are not
available when needed
An assembly line was shut
down for lack of materials
A duplication of effort
by employees exists
Production and accounting
keep identical records
Effectiveness Versus Efficiency
56. Work is done that serves
no purpose
Vendors’ invoices and
receiving reports are filed
without being used
There are too many
employees
Office work could be done
with one less assistant
Types of Inefficiency Example
Effectiveness Versus Efficiency
57.
58.
59. Types of Operational Audits
There are three broad categories of operational audits:
FUNCTIONAL, ORGANIZATIONAL, and SPECIAL
ASSIGNMENTS.
In each case, part of the audit is likely to concern evaluating
internal controls for efficiency and effectiveness.
60.
61.
62. Who Performs Operational Audit? - Among the activities of the
internal auditor than can aptly be construed as part of operations
audit are:
• Reviewing the reliability and integrity of financial and operating
information and the means use to identify, measure, classify, and report
such information.
• Reviewing the internal control structure established to ensure compliance
with those policies, plans, procedures, laws, and regulations which could
have significant impact on operations and reports and should determine
whether the organization is In compliance.
• Reviewing the means of safeguarding the assets and, as appropriate,
verify the existence of such assets.
• Appraising the economy and efficiency with which resources are
employed.
• Reviewing operations or programs to ascertain whether the results are
consistent with established objectives and goals and whether the
operations or programs are being carried out as planned.
63. CPA firms
Government auditors
Internal auditors
Who Performs Operational Audits
64. The two most important qualities
for an operational auditor are:
Independence and Competence
of Operational Auditors
Independence
Competence
65. Specific Criteria
Were all plant layouts approved by home office
engineering at the time of original design?
Has home office engineering done a reevaluation
study of plant layout in the past five years?
Questions that might be used to evaluate
plant layouts:
66. Specific Criteria
Is each piece of equipment operating
at least 60 percent of capacity for
three months or more each year?
Does layout facilitate the movement of
new materials to the production floor?
Does layout facilitate the production
of finished goods?
67. Specific Criteria
Does layout facilitate the movement of
finished goods to distribution centers?
Does the plant layout effectively use
existing equipment?
Is the safety of employees endangered
by the plant layout?
68. Sources of Criteria
Historical performance
Benchmarking
Engineered standards
Discussion and agreement
69. Phases in Operational Auditing
Planning
Evidence accumulation and evaluation
Reporting and follow up
70. Planning
Staffing
Understand internal control
Background information
Decide on appropriate evidence
Scope of engagement
72. Reporting and Follow Up
1. In operational audits, the report is
usually sent only to management
Two major differences in operational
and financial auditing reports:
2. Tailoring of each report is required
in operational audits
73. Examples of Operational
Audit Findings
Outside janitorial firm saves $160,000
Use the right tool
Computer programs save manual labor