1 Supporting Processes Special thanks to Geoff Leese

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 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 Types of accounting n Payroll n Cost

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 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 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 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 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 Variance analysis

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 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 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 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 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 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