USING I.T. IN ACCOUNTING PROCEDURES
SECTION 1
Using information technology in accounting procedures
To allow managers to make effective decisions within an organisation it
is essential that they have access to information. To ensure the success
of a business this information must also have certain characteristics
which increase the value to the manager who will be using it within the
decision making process. It must be:
• accurate – mistake free
• complete – it must contain all the necessary details for the decision to
be made
• available – easy to obtain by using a cost-effective method
• timely – available when it is needed
• up-to-date – the most recent figures available.
As a result of the increased use of computers over the past few decades
and the constant improvements and innovations in technology, working
procedures within business organisations have been revolutionised.
This has also brought about improved communication systems which
have seen us move into the ‘Information Age’ with information and
communication technology (ICT) playing a major role in every business
organisation. A major factor in this improvement is, of course, the
internet.
Electronic technology has made it possible for vast quantities of data to
be produced and processed as well as allowing its storage and retrieval
with relative ease.
The ‘Information Age’ has therefore had an enormous effect on the way
businesses operate, with ICT being used to allow every department to
communicate with each other, and to share files and information across
the whole company. These systems are known as Management
Information Systems.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
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USING I.T. IN ACCOUNTING PROCEDURES
Inevitably, accounting procedures and systems within organisations have
rapidly moved away from manual book keeping to electronic systems.
These accounting information systems play an important role within the
organisation as a whole.
The advances in technology have resulted in less routine work being
needed, as the same data no longer has to be entered several times
because all information entered onto a computer system is automatically
available to all appropriate members of staff from initial input.
In retail establishments computerised data processing is widely used and
easily recognisable in large supermarkets as well as, nowadays, small
corner shops.
All stock is bar coded and scanners are used to input details from the
stock item into a centralised computer system. The information read by
the scanner contains data on the supplier, and details of the item and its
origins. This data is processed within the centralised system and the
price of the item is transmitted back to the cash point where a till
receipt is printed with the relevant information and the transaction
total.
This allows stock control to be monitored and constantly updated. In
the case of large supermarket chains, prices are updated within the
central computer by a data processor and every branch in the country
can access this information reducing the need for individual branches to
worry about pricing. No longer do you see assistants standing with a
pricing gun individually putting a price ticket on every item.
The use of switch and credit cards, which is known as electronic funds
transfer (EFT), has also dramatically increased over recent years as a
result of ICT where money is electronically transferred from the
purchaser’s bank to the store’s account without any money actually
changing hands. Procedures are also in place in this system to stop
fraud and theft as each time a card is swiped it is checked against a list of
stolen cards.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING I.T. IN ACCOUNTING PROCEDURES
Tasks
1.
Using words from the word bank at the foot of the page, copy and
complete the following sentences:
(
Information and communication
)
by businesses and individuals
has become easily
.
mainly as a result of the introduction of the
This electronic technology has enabled
quantities of
to be input and
Storage and
is easily managed.
ICT allows every
to
.
with
each other, and also ensures
is
available across the whole
company.
This has resulted in a move away from
procedures to
systems meaning less
work is carried out saving both
and
Computerised data
.
is widely used in
establishments using bar codes and
.
Word bank
manual
information
data
department
money
communicate
vast
processed
retrieval
processing
scanners
automatically
accessible
internet
retail
routine
electronic
technology
ICT
accurate
time
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
3
USING I.T. IN ACCOUNTING PROCEDURES
2.
Complete the following diagram with the five basic characteristics
of valuable information:
!
!
Accurate
!
!
!
Characteristics of
Information
!
!
!
!
!
4
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING I.T. IN ACCOUNTING PROCEDURES
3.
Case study
Morris Brothers
Morris Brothers have recently announced they are updating
their existing systems and procedures within their five
branches located throughout the country.
They are installing a computerised system which will allow
stock records to be updated automatically and sales levels to
be instantly available at the touch of a button.
This system will involve the implementation of a central server
at head office into which all the necessary data will be input,
thereby saving time and money throughout the company as
individual branches will no longer have to carry out this task.
It will ensure that prices are standard across the company and
up-to-date information available whenever it is required either
to monitor progress or to make effective decisions with regard
to sales and profit levels.
(a)
List four advantages to the company of installing a
computerised system to replace their existing manual
procedures.
(b)
What will be used at the cash point to allow this system to
work effectively?
(c)
Explain why installing this system will save the company time
and money.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING INTEGRATED SOFTWARE IN ACCOUNTING
SECTION 2
Using integrated software in accounting
The reasons why businesses need accounting information can be
evaluated under three main headings:
• Monitoring and control – to compare actual performance against
forecast performance to allow budgets to be drawn up.
• Decision making – to make the correct decisions by looking at what
items are selling well, which branches are making the most profit and
why.
• Measuring performance – to compare the performance of the
business against competitors or to compare branch with branch.
The use of integrated software, that is computer packages which can
work effectively on their own as well as allowing each package to
integrate with another, is widely used to enhance these three areas.
Some companies may get their own software written for them by a
software manufacturer so that it does exactly what they want it to do.
This is known as customised software.
However, this is very expensive and not an option for many medium or
small sized businesses. They would use ready-written software such as
Microsoft Office and customise it themselves as required.
Let’s look at three of the elements which make up Microsoft Office and
the role they can play within accounting procedures.
Word processing
This is used for all routine clerical tasks such as letters, memos, reports,
etc.
Features of a word processing package include the ability to change font
and font size, margins, alignment, spellcheck, etc., which can all be used
to produce professional documentation.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
7
USING INTEGRATED SOFTWARE IN ACCOUNTING
It also allows the editing, storage and recall of documents easily as well
as the ability to create templates which can be used again and again to
ensure standardisation of documents.
It can also be used to import text and graphics from other software
packages.
Examples of when a word processing application would be used are:
• letters to clients giving job estimates or financial information
• ‘mail merge’ letters to large numbers of clients integrating word
processing and database applications
• preparing invoice templates.
Spreadsheets
This application allows calculations to be made both in the form of
simple arithmetical and statistical calculations.
It performs calculations such as totals, averages and ratios as well as
‘What if’ scenarios to calculate figures under possible scenarios which
might occur.
It can also be used to produce charts or graphs to display calculations or
information for presentation purposes.
Spreadsheet applications would be used to:
•
•
•
•
prepare cash budgets
prepare financial forecasts
prepare Trading, Profit & Loss Accounts
produce charts and graphs from financial information.
Databases
Databases are electronic filing systems which are used to keep records of
staff, customers or suppliers.
The functions which a database can carry out are:
•
•
•
•
searching for specific information
sorting records into order
performing calculations within records
producing reports summarising information.
8
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING INTEGRATED SOFTWARE IN ACCOUNTING
Tasks
4.
Copy and complete the following table:
Task
Application used
Produce a chart showing
sales information for year
ending 2004
Prepare a letter to send
to clients with overdue
accounts
Store client details
Prepare next year’s
financial budget
Prepare monthly invoice
template
Search for a list of clients
based in Aberdeen
5.
Use a word processing package to produce a poster with
information on all three software applications, i.e. word
processing, database and spreadsheets.
6.
List the three main areas which can be used to evaluate the use of
accounting information.
7.
What does the term ‘customised software’ mean?
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
WHY USE INFORMATION TECHNOLOGY?
SECTION 3
Why use information technology?
As we have seen, computers can process vast quantities of information
very quickly. They reduce tasks involved in routine work as data does
not have to be duplicated, since all departments can access relevant
files.
There are many advantages which are brought to a business by using
information technology. Some are listed below:
• Speed and quality of information is improved
• Information can be shared throughout the organisation
• Fewer errors are made when making calculations as computers tend
to make fewer errors
• Productivity is increased as work is completed faster.
However, where there are advantages there will also be disadvantages.
Disadvantages of information technology include:
• The high cost of buying and installing the necessary equipment
• Staff will require training to use the equipment which involves
additional time and money
• Workers may be unhappy due to the pressure of learning to use the
new equipment
• Redundancies may occur as productivity is improved and fewer
workers are required.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
11
WHY USE INFORMATION TECHNOLOGY?
Tasks
8.
Case study
Chalmers & Johnston
This small accounting company has been operating in Glasgow
for fifteen years. They produce final accounts including
Balance Sheets and Trading, Profit and Loss Accounts for small
local companies.
The staff of the company is made up of two Accountants, three
Book-keepers and a Clerical Assistant. At present all practices
are carried out manually following procedures which have
been in place since the company began trading.
As many of their clients use computers to record their daily
transactions, they feel they should consider changing their
operating procedures to a computerised system.
They are currently investigating changing to using integrated
software applications including word processing, spreadsheets
and databases.
(a)
One of the book-keepers, Mary McDonald, has worked for the
company since they began trading. She is concerned about
the changes this will bring about and how she will cope.
Working with a partner, put yourself in Mary’s position and
identify what concerns she may be worrying about.
12
(b)
Now write a memo to Mary to let her know you understand
how she feels and try to convince her that the installation of a
computerised system would be beneficial to her by
highlighting the advantages it could bring.
(c)
Apart from the three software packages we have discussed,
what other application could be used by the company to
improve communication with their clients?
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
WHY USE INFORMATION TECHNOLOGY?
9.
Working in groups ‘brainstorm’ to come up with benefits
(advantages) and costs (disadvantages) to a small accounting firm
which is considering changing from a manual book-keeping system
to using a computerised software package.
Benefits
Costs
When you have completed the table, decide in your group what
you think the company should do – continue using their present
system or install computers.
Report your findings back to the class.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
13
WHY USE INFORMATION TECHNOLOGY?
Specialised accounting packages
Some companies may decide not to use a ready-written software
package as they have particular procedures which cannot be carried out
effectively.
They would then look at specialised accounting packages which are
available to buy, such as Sage Accounting Packages. These are slightly
more costly and would involve more specialised training for staff.
They can also approach a software manufacturing company which will
carry out research to identify exactly what manual systems and
procedures they require and will custom-make a package to suit their
needs exactly. The cost of this is very high and would probably only be
undertaken by large national or multi-national companies.
Tasks
10.
14
With a partner, search the internet to find at least five different
manufacturers of specialised accounting software packages – print
out your findings.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING SPREADSHEETS
SECTION 4
Using spreadsheets for recording and apportioning cost
elements
We will now use Microsoft Excel to calculate the following accounting
problems:
Task 11
Carly’s Costume Suppliers have completed an order of six full Highland
Dress outfits for Harry’s Highland Dancers.
They now have to complete a Job Card for the order.
Open up a new spreadsheet and save as Harry’s Highland Dancers.
Key in the following template:
A
1
B
C
D
E
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
HARRY’S HIGHLAND DANCERS
2
3
JOB NUMBER 234
4
5
Overheads
6
Cutting
7
Sewing
8
Finishing
9
Total
10
11 Direct Materials
12 Direct Expenses
13
14 Total Cost
15
16 Profit Margin 25%
17
18 Job Price
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
15
USING SPREADSHEETS
It is now necessary to format the cells to ensure they contain the correct
type of figures.
Highlight columns C and D by clicking on the grey C and D at the top of
the sheet.
Select Format/Cells/Number
and 0 decimal places.
Highlight column E and select
Format/Cells/Currency and
0 decimal places.
When calculating the final job price, the first thing that has to be
considered is the overheads.
16
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING SPREADSHEETS
What are overheads? They include expenses such as rent and rates,
insurance, heat and light, etc. These expenses cannot be directly
allocated to one job as there will be lots of different jobs being carried
out at the same time. It is necessary therefore to apportion or divide
the total cost of these overheads between all the departments and then
between all the different jobs that are being carried out over the year.
Carly’s Costume Suppliers have allocated the overheads for the next
year for each department as follows:
Department
Total Overhead Allocated
Cutting
£3,000
Sewing
£4,575
Finishing
£4,400
These total overheads have now to be apportioned to each individual
job by calculating an absorption rate. Carly’s Costume Suppliers use the
number of machine hours involved in each department as the method of
apportioning the overheads.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
17
USING SPREADSHEETS
The following table shows how many machine hours Carly’s Costume
Suppliers have forecast will be spent in each department over the next
year.
Department
Machine Hours
Cutting
250
Sewing
305
Finishing
550
The absorption rate for the overheads of each department is calculated
by dividing the Total Overhead Allocated by the Machine Hours:
Department
Cutting
Department
Sewing
Finishing
Calculation
Total Overhead Allocated/Machine Hours
Absorption
Rate
=£3,000/250
=£4,575/305
=£4,400/550
12
15
8
This calculated Absorption Rate can now be used to produce the job
price for Job No 234.
First of all we need to know how many machine hours were spent in
each department to produce Job No 234.
Department
Machine Hours
Cutting
25
Sewing
30
Finishing
55
These figures can now be keyed into the spreadsheet:
5
Overheads
Department
Rate Applied
Hours
Cutting
12
25
7
Sewing
15
30
8
Finishing
8
55
Overheads
Absorbed
6
The Overheads Absorbed are calculated by multiplying the Rate Applied
by the Hours.
18
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING SPREADSHEETS
Key the following formula in cell E6:
=C6*D6
Press Enter – the cell should read £300
Key in the same formula to cells E7 and E8 using the relevant cell
references for each department.
To total the Overheads Absorbed key the following formula in cell E9:
=SUM(E6:E8)
5
Overheads
Department
Rate Applied
Hours
Overheads
Cutting
12
25
£300
7
Sewing
15
30
£450
8
Finishing
8
55
£440
9
Total
Absorbed
6
£1,190
We are now ready to complete the remainder of the Job Card.
The next item is Direct Materials. This would be the cost of the material
to make the dance outfits. The invoice from the supplier reads £920.
Key £920 into cell E11.
Direct Expenses is anything else which has had to be bought especially
for this job. In this case buckles and belts were bought costing £550.
Key £550 into cell E12.
The Total Cost before profit can now be calculated by adding the Total
Overheads, Direct Materials and Direct Expenses.
In cell E14 key in the following formula:
=SUM(E9:E12)
Check your calculations:
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
19
USING SPREADSHEETS
5
Overheads
Department
Rate Applied
Hours
Overheads
Absorbed
6
Cutting
12
25
£300
7
Sewing
15
30
£450
8
Finishing
8
55
£440
9
Total
£1,190
10
11
Direct Materials
£920
12
Direct Expenses
£550
13
14
Total Cost
£2,660
The final step is to calculate the profit which will be made on this job.
Carly’s Costume Suppliers add 25% onto the Total Cost of a job as their
profit margin.
In cell E16 key in the following formula:
=E14*25%
The Job Price is the Total Cost plus the Profit Margin. In cell E18 key in
the following formula:
=E14+E16
16
Profit Margin 25%
£665
17
18
Job Price
Job No 234 will be invoiced as £3,325.
20
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
£3,325
USING SPREADSHEETS
Task 12
Following the above steps complete a Job Card for Job No 456 which
involves producing 32 Samba dresses for Sally’s Samba Swingers.
Open up a spreadsheet and save as Sally’s Samba Swingers.
The details needed to complete the Job Card are as follows:
Department
Calculation
Absorption Rate
Cutting Department
=£11,880/660
18
Sewing
=£11,000/550
20
Finishing
=£8,640/720
12
Department
Machine Hours
Cutting
75
Sewing
85
Finishing
105
Direct Materials
£2,580
Direct Expenses
£350
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
21
USING SPREADSHEETS
Key in the following template remembering to format columns. Insert
the appropriate figures and complete the calculations.
A
1
B
C
D
E
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
Sally’s Samba Swingers
2
3
JOB NUMBER 456
4
5
Overheads
6
Cutting
7
Sewing
8
Finishing
9
Total
10
11 Direct Materials
12 Direct Expenses
13
14 Total Cost
15
16 Profit Margin 25%
17
18 Job Price
Task 13
Complete a Job Card (Job No 986) for Flora’s Fashion House who have
ordered 200 pairs of tartan trousers. The details of the job are listed
below:
Department
Calculation
Absorption Rate
Cutting Department
=£26,400/1,200
22
Sewing
=£33,600/1,400
24
Finishing
=£15,300/850
18
Department
Machine Hours
Cutting
146
Sewing
186
Finishing
22
85
Direct Materials
£3,570
Direct Expenses
£128
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING SPREADSHEETS
Task 14
Carly’s Costume Suppliers have been asked to produce an order for
Scotland’s entry into the European Ballroom Dancing Championships.
This order was placed by Scottish Ballroom Dancing Ltd. They have
been asked to supply a price for the whole job which involves making 10
Latin American ballgowns and 10 black dance suits. This is Job No 532.
On this occasion they have not calculated the Absorption Rate for the
overheads – you must complete this task first.
Set up your template as detailed below formatting columns as before:
A
1
B
C
D
E
Basis
Total
Hours
Absorption
Scottish Ballroom Dancing Ltd
2
3
Overhead absorption rates
4
Overhead
Rate
5
Cutting
Dir m/c hrs
6
Sewing
Dir m/c hrs
7
Finishing
Dir m/c hrs
8
9
JOB NUMBER 532
10
11 Overheads
Department
12
Cutting
13
Sewing
14
Finishing
15
Total
Rate
Machine
Overheads
Applied
Hours
Absorbed
16
17 Direct Materials
18 Direct Expenses
19
20 Total Cost
21
22 Profit Margin 25%
23
24 Job Price
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
23
USING SPREADSHEETS
The data required to complete the Overhead Absorption Rates is as
follows:
Department
Total Overhead Allocated
Total Machine
Hours
Cutting Department
£31,500
1,500
Sewing
£36,000
3,000
Finishing
£18,000
1,000
1.
In cell C5 key in the Total Overhead Allocation for the Cutting
Department (31,500).
2.
In cell C6 key in the Total Overhead Allocation for the Sewing
Department.
3.
In cell C7 key in the Total Overhead Allocation for the Finishing
Department.
4.
In D5 key in the Total Machine Hours for the Cutting Department
(1,500), in D6 the Total Machine Hours for the Sewing Department
and in D7 the Total Machine Hours for the Finishing Department.
5.
To calculate the Absorption Rate you must divide the Total
Overhead Allocation by the Total Machine Hours. In E5 key in the
following formula:
=C5/D5
6.
Now enter the appropriate formula in cells E6 and E7.
4
Overhead
Basis
Total
Hours
Absorption
5
Cutting
Dir m/c hrs
£31,500
1,500
£21
6
Sewing
Dir m/c hrs
£36,000
3,000
£12
7
Finishing
Dir m/c hrs
£18,000
1,000
£18
Rate
7.
24
Once the Absorption Rate has been calculated you can now
complete the Job Card using the following information:
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING SPREADSHEETS
Department
Machine Hours
Cutting
280
Sewing
320
Finishing
150
Direct Materials
£4,500
Direct Expenses
£1,400
Task 15
Calculate the Absorption Rate and complete the Job Card for Job No 123
for Murray’s Minuets. The details are listed below:
Department
Total Overhead Allocated
Total Machine
Hours
Cutting Department
£319,000
14,500
Sewing
£180,000
15,000
Finishing
£126,000
9,000
Department
Machine Hours
Cutting
360
Sewing
290
Finishing
120
Direct Materials
£3,600
Direct Expenses
£800
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
25
USING SPREADSHEETS
Task 16
Calculate the Absorption Rate and complete the Job Card for Job No 784
for Salsa Direct. As there were many problems associated with this job,
Carly has decided to add a profit margin of 30%.
The details are listed below:
Department
Total Overhead Allocated
Total Machine
Hours
Cutting Department
Sewing
Finishing
26
£22,500
1,250
£150,640
5,380
£37,500
2,500
Department
Labour Hours
Cutting
190
Sewing
440
Finishing
265
Direct Materials
£5,480
Direct Expenses
£3,560
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
USING WORD PROCESSING AND SPREADSHEETS
SECTION 5
Using word processing and spreadsheets to solve accounting
problems
The main benefit of using integrated software applications is that data
from each package can be copied into another thereby saving time and
money as data does not have to be keyed in twice.
Task 17
Carly’s Costume Suppliers have to send out a copy of the job price to
Murray’s Minuets.
1.
Open up a word processing document and save as Murray’s
Minuets – Job No 123.
2.
Key in the following letter:
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Murray’s Minuets
22 Main Street
COATBRIDGE
ML4 3HN
Dear Sir
JOB NUMBER 123
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
27
USING WORD PROCESSING AND SPREADSHEETS
3.
Open up the spreadsheet for Murray’s Minuets.
4.
Highlight cells A9 to F24 and select copy.
5.
Place cursor below Carly Craig and select paste.
6.
Ensure the document fits onto one page and print.
Task 18
Send letters to the following clients with job price details brought in
from the relevant spreadsheets.
Remember not to include the Overhead Absorption rates section within
the letter, only copy the spreadsheet from the Job Number.
(a)
Flora’s Fashion House
90 Edinburgh Road
EDINBURGH
EH2 4JH
(b)
Harry’s Highland Dancers
246 Espieside Road
LANARK
ML5 7NH
(c)
Sally’s Samba Swingers
67 Morton Drive
AYR
KA7 5HN
(d)
Scottish Ballroom Dancing Ltd
Waltz House
55 Kilmore Street
GLASGOW
G2 4RD
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
SECTION 6
1.
Information and communication technology (ICT) has become
easily accessible by businesses and individuals mainly as a result of
the introduction of the internet.
This electronic technology has enabled vast quantities of
information to be input and processed. Storage and retrieval is
easily managed.
ICT allows every department to communicate with each other, and
also ensures accurate data is automatically available across the
whole company.
This has resulted in a move away from manual procedures to
electronic systems meaning less routine work is carried out saving
both time and money.
Computerised data processing is widely used in retail
establishments using bar codes and scanners.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
29
SOLUTIONS TO TASKS
2.
Easy to obtain
Mistake free
!
!
Accurate
!
Available
!
!
Characteristics of
Information
Complete
!
!
Contains all the
necessary details
Timely
!
Up-to-date
!
!
Available when
needed
Most recent figures
available
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
3.
Case study
(a)
•
•
•
•
•
(b)
Bar codes and scanners
(c)
Data only input once by head office – each branch no longer has to
carry out this task.
Stock records updated automatically
Sales levels instantly available
Time and money saved as data only input once
Ensures standardised pricing
Up-to-date information available when required
More effective decision making as a result of information being
available immediately saves time and money.
4.
Task
Application used
Produce a chart showing
sales information for year
ending 2004
Spreadsheet
Prepare a letter to send to
clients with overdue
accounts
Word processing
Store client details
Database
Prepare next years
financial budget
Spreadsheet
Prepare monthly invoice
template
Word processing
Search for a list of clients
based in Aberdeen
Database
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
31
SOLUTIONS TO TASKS
5.
Students to prepare appropriate poster.
6.
Monitoring and control – to compare actual performance against
forecast performance to allow budgets to be drawn up.
Decision making – to make the correct decisions by looking at
what items are selling well, which branches are making the most
profit and why.
Measuring performance – to compare the performance of the
business against competitors or to compare branch with branch.
7.
Some companies may get their own software written for them by a
software manufacturer so that it does exactly what they want it to
do. This is known as customised software.
8.
(a)
Mary may be worried about:
– learning new skills
– not being able to use computers
– losing skills she has perfected as manual book-keeper
– being made redundant;
(b)
assure Mary that:
– changes will be beneficial in terms of learning new skills
– employment opportunities will be enhanced
– she will not be made redundant
– she will be given as much help as she needs to learn new
skills;
(c)
e-mail; PowerPoint; desk-top publishing.
32
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
9.
Benefits
Costs
Quality of information
Cost of buying equipment
improved
Work is more accurate
Cost of training staff
Productivity is increased
Low morale of workers
Information can be shared
Redundancies
Students will have own individual findings in response to decision
made.
10.
Students should access manufacturers using search engines.
11.
A
1
B
C
Department
Rate
D
E
HARRY’S HIGHLAND DANCERS
2
3
JOB NUMBER 234
4
5
Overheads
Overheads
Applied
Hours
6
Cutting
12
25
Absorbed
£300
7
Sewing
15
30
£450
8
Finishing
8
55
£440
9
Total
£1,190
10
11 Direct Materials
£920
12 Direct Expenses
£550
13
14 Total Cost
£2,660
15
16 Profit Margin 25%
£665
17
18 Job Price
£3,325
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
33
SOLUTIONS TO TASKS
HARRY’S HIGHLAND DANCERS
JOB NUMBER 234
Overheads
Department
Rate
Overheads
Applied
Hours
Absorbed
Cutting
12
25
=C6*D6
Sewing
15
30
=C7*D7
Finishing
8
55
=C8*D8
Total
=SUM(E6:E8)
Direct Materials
£920
Direct Expenses
£550
Total Cost
=SUM(E9:E12)
Profit Margin 25%
=E14*25%
Job Price
=E14+E16
12.
A
1
B
C
D
E
Department
Rate
Overheads
Applied
Machine Hours
Absorbed
SALLY’S SAMBA SWINGERS
2
3
JOB NUMBER 456
4
5
Overheads
6
Cutting
18
75
£1,350
7
Sewing
20
85
£1,700
8
Finishing
12
105
£1,260
9
Total
£4,310
10
11 Direct Materials
£2,580
12 Direct Expenses
£350
13
14 Total Cost
£7,240
15
16 Profit Margin 25%
£1,810
17
18
34
Job Price
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
£9,050
SOLUTIONS TO TASKS
SALLY’S SAMBA SWINGERS
JOB NUMBER 456
Overheads
Department
Rate
Applied
Machine
Hours
Overheads
Absorbed
Cutting
18
75
=C6*D6
Sewing
20
85
=C7*D7
Finishing
12
105
=C8*D8
Total
=SUM(E6:E8)
Direct Materials
£2,580
Direct Expenses
£350
Total Cost
=SUM(E9:E12)
Profit Margin 25%
=E14*25%
Job Price
=E14+E16
13.
A
1
B
C
D
E
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
FLORA’S FASHION HOUSE
2
3
JOB NUMBER 986
4
5
Overheads
6
Cutting
22
146
£3,212
7
Sewing
24
186
£4,464
8
Finishing
18
85
£1,530
9
Total
£9,206
10
11 Direct Materials
£3,570
12 Direct Expenses
£128
13
14 Total Cost
£12,904
15
16 Profit Margin 25%
£3,226
17
18
Job Price
£16,130
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
35
SOLUTIONS TO TASKS
FLORA’S FASHION HOUSE
JOB NUMBER 986
Overheads
Department
Rate
Machine Overheads
Applied
Hours
Absorbed
Cutting
22
146
=C6*D6
Sewing
24
186
=C7*D7
Finishing
18
85
=C8*D8
Total
=SUM(E6:E8)
Direct Materials
£3,570
Direct Expenses
£128
Total Cost
=SUM(E9:E12)
Profit Margin 25%
=E14*25%
Job Price
=E14+E16
36
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
14.
A
1
B
C
D
E
Absorption
SCOTTISH BALLROOM DANCING LTD
2
3
Overhead absorption rates
4
Overhead
Basis
Total
Hours
5
Cutting
Dir m/c hrs
31,500
1,500
Rate
£21
6
Sewing
Dir m/c hrs
36,000
3,000
£12
7
Finishing
Dir m/c hrs
18,000
1,000
£18
Department
Rate
8
9
JOB NUMBER 532
10
11 Overheads
Overheads
Applied
Hours
Absorbed
12
Cutting
21
280
£5,880
13
Sewing
12
320
£3,840
14
Finishing
18
150
15
Total
£2,700
£12,420
16
17 Direct Materials
£4,500
18 Direct Expenses
£1,400
19
20 Total Cost
£18,320
21
22 Profit Margin 25%
£4,580
23
24 Job Price
£22,900
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
37
SOLUTIONS TO TASKS
SCOTTISH BALLROOM DANCING LTD
Overhead absorption rates
Overhead
Basis
Total
Hours
Absorption
Rate
Cutting
Dir m/c hrs
£31,500
1,500
=C5/D5
Sewing
Dir m/c hrs
£36,000
3,000
=C6/D6
Finishing
Dir m/c hrs
£18,000
1,000
=C7/D7
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
21
280
=C12*D12
JOB NUMBER 532
Overheads
Cutting
Sewing
12
320
=C13*D13
Finishing
18
150
=C14*D14
Total
=SUM(E12:E14)
Direct Materials
£4,500
Direct Expenses
£1,400
Total Cost
=SUM(E15:E18)
Profit Margin 25%
=E20*25%
Job Price
=E20+E22
38
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
15.
A
1
B
C
D
E
Hours
Absorption
MURRAY’S MINUETS
2
3
Overhead absorption rates
4
Overhead
Basis
Total
5
Cutting
Dir m/c hrs
£319,000 14,500
£22
Rate
6
Sewing
Dir m/c hrs
£180,000 15,000
£12
7
Finishing
Dir m/c hrs
£126,000
£14
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
9,000
8
9
JOB NUMBER 123
10
11 Overheads
12
Cutting
£22
360
£7,920
13
Sewing
£12
290
£3,480
14
Finishing
£14
120
15
Total
£1,680
£13,080
16
17 Direct Materials
£3,600
18 Direct Expenses
£800
19
20 Total Cost
£17,480
21
22 Profit Margin 25%
£4,370
23
24 Job Price
£21,850
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
39
SOLUTIONS TO TASKS
MURRAY'S MINUETS
Overhead absorption rates
Overhead
Basis
Total
Hours
Absorption Rate
Cutting
Dir m/c hrs
£319,000 14,500 =C5/D5
Sewing
Dir m/c hrs
£180,000 15,000 =C6/D6
Finishing
Dir m/c hrs
£126,000
Department
Rate
9,000 =C7/D7
JOB NUMBER 123
Overheads
Cutting
Overheads
Applied
Hours
Absorbed
=E5
360
=C12*D12
Sewing
=E6
290
=C13*D13
Finishing
=E7
120
=C14*D14
Total
=SUM(E12:E14)
Direct Materials
£3,600
Direct Expenses
£800
Total Cost
=SUM(E15:E18)
Profit Margin 25%
=E20*25%
Job Price
=E20+E22
40
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
16.
A
1
B
C
D
Total
Machine
Absorption
Hours
Rate
SALSA DIRECT
2
3
Overhead absorption rates
4
Overhead
Basis
5
Cutting
Dir m/c hrs
£22,500 1,250
£18
6
Sewing
Dir m/c hrs
£150,640 5,380
£28
7
Finishing
Dir m/c hrs
£37,500 2,500
£15
8
9
JOB NUMBER 784
10
11 Overheads
Department
Rate
Machine
Overheads
Applied
Hours
Absorbed
12
Cutting
£18
190
£3,420
13
Sewing
£28
440
£12,320
14
Finishing
£15
265
15
Total
£3,975
£19,715
16
17 Direct Materials
£5,480
18 Direct Expenses
£3,560
19
20 Total Cost
£28,755
21
22 Profit Margin 30%
£8,627
23
24 Job Price
£37,382
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
41
SOLUTIONS TO TASKS
SALSA DIRECT
Overhead absorption rates
Overhead
Basis
Total
Hours
Absorption Rate
Cutting
Dir m/c hrs
£22,500 1,250
=C5/D5
Sewing
Dir m/c hrs
£150,640 5,380
=C6/D6
Finishing
Dir m/c hrs
£37,500 2,500
=C7/D7
JOB NUMBER 784
Overheads
Department
Cutting
Rate
Overheads
Applied
Hours
Absorbed
=E5
190
=C12*D12
Sewing
=E6
440
=C13*D13
Finishing
=E7
265
=C14*D14
Total
=SUM(E12:E14)
Direct Materials
£5,480
Direct Expenses
£3,560
Total Cost
=SUM(E15:E18)
Profit Margin 30%
=E20*30%
Job Price
=E20+E22
42
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
17.
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Murray’s Minuets
22 Main Street
COATBRIDGE
ML4 3HN
Dear Sir
JOB NUMBER 123
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
JOB NUMBER 123
Overheads
Department
Rate
Applied
Overheads
Hours
Absorbed
Cutting
£22
360
£7,920
Sewing
£12
290
£3,480
Finishing
£14
120
Total
£1,680
£13,080
Direct Materials
£3,600
Direct Expenses
£800
Total Cost
Profit Margin 25%
Job Price
£17,480
£4,370
£21,850
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
43
SOLUTIONS TO TASKS
18(a)
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Flora’s Fashion House
90 Edinburgh Road
EDINBURGH
EH2 4JH
Dear Sir
JOB NUMBER 986
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
JOB NUMBER 986
Overheads
Department
Cutting
Rate
Machine Overheads
Applied
Hours
22
146
Absorbed
£3,212
Sewing
24
186
£4,464
Finishing
18
85
£1,530
Total
£9,206
Direct Materials
£3,570
Direct Expenses
£128
Total Cost
Profit Margin 25%
Job Price
44
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
£12,904
£3,226
£16,130
SOLUTIONS TO TASKS
18(b)
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Harry’s Highland Dancers
246 Espieside Road
LANARK
ML5 7NH
Dear Sir
JOB NUMBER 234
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
JOB NUMBER 234
Overheads
Department
Rate
Machine
Applied Hours
Cutting
12
Sewing
Finishing
Total
Overheads
Absorbed
25
£300
15
30
£450
8
55
£440
£1,190
Direct Materials
£920
Direct Expenses
£550
Total Cost
Profit Margin 25%
Job Price
£2,660
£665
£3,325
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
45
SOLUTIONS TO TASKS
18(c)
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Sally’s Samba Swingers
67 Morton Drive
AYR
KA7 5HN
Dear Sir
JOB NUMBER 456
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
JOB NUMBER 456
Overheads
Department
Cutting
Rate
Machine
Overheads
Applied
Hours
Absorbed
18
75
£1,350
Sewing
20
85
£1,700
Finishing
12
105
£1,260
Total
£4,310
Direct Materials
£2,580
Direct Expenses
£350
Total Cost
£7,240
Profit Margin 25%
£1,810
Job Price
£9,050
46
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
SOLUTIONS TO TASKS
18(d)
Carly’s Costume Suppliers
3782 High Street
DUNDEE
DD3 5HG
CC/(insert your initials)
Insert today’s date
Scottish Ballroon Dancing Ltd
Waltz House
55 Kilmore Street
GLASGOW
G2 4RD
Dear Sir
JOB NUMBER 532
We have pleasure in detailing below our price to complete the production of
the costumes you have requested.
We hope this is in order and thank you for your custom.
Yours faithfully
Carly Craig
JOB NUMBER 532
Overheads
Department
Cutting
Rate
Overheads
Applied
Hours
21
280
Absorbed
£5,880
Sewing
12
320
£3,840
Finishing
18
150
£2,700
Total
£12,420
Direct Materials
£4,500
Direct Expenses
£1,400
Total Cost
Profit Margin 25%
Job Price
£18,320
£4,580
£22,900
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 1)
47