1. 1 Supporting Processes Special thanks to Geoff Leese

2. 2 Support processes n 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

3. 3 Accounting Information n Most obvious information needed to support the running of the business will be the company’s financial position n Derived from its business transactions and used to control Costs vs profits n Information comes from book keeping procedures n Used to improve efficiency and profitability

4. 4 Types of accounting n Payroll n Cost

5. 5 Payroll n Calculate employee’s gross pay n Calculate deductions ä Tax ä Pension n Calculate net pay n Accounting for amounts deducted from earnings for external bodies

6. 6 Documents involved n Pay advice n Payroll n Bank direct credit lists n Cheques n Deductions analysis n Cost analysis n End of year documents n Audit and control documents n Wages records

7. 7 Computerised payroll systems n The vast majority of companies either process wages themselves using software such as Sage or outsource to large data processing companies

8. 8 Cost accounting n Establishes the idea that organisations activities are accomplished at acceptable costs and that all cost discrepancies are accounted for n Cost expenditures are compared with standards and the differences between actual and standard costs are analysed

9. 9 Variance analysis n The difference between the predicted estimated and the actual is termed the variance n Analysis of variances provide management with valuable information for control and planning

10. 10 Variance analysis

11. 11 Analysis of cost data n Provides information that helps management decide methods of production and material to use n Need to apportion overheads such as rent and heating between production jobs to predict a realistic selling price

12. 12 Marginal costing n Determines the extra cost involved in producing an item above a certain level of production n If the fixed costs have been absorbed a marginal cost tends to be less than the standard cost

13. 13 Break-even analysis n Relates turnover to costs n Enables management to decide at what level of turnover the operation becomes profitable and above this level what profit is made

14. 14 Budgetary control n Means of controlling expenditure by making forecasts of future expenditure n This enable provisional accounts and costs to be devised so that an advance estimate of the financial situation is available n Departments are expected to conform to their budgets or justify deviations

15. 15 Computerised systems n Provide managers with up to date information in a variety of formats to facilitate these support processes n The amount of data required makes it necessary to store information in a digital format to provide forecasts to aid decision making

16. 16 Conclusion n This presentation has considered the processes that are used to support the business processes. n Further reading – ä Wikipedia article on cost accounting (Nov 08) Wikipedia article on cost accounting (Nov 08 ä Link at Business link – Payroll (Nov 08) Link at Business link – Payroll