International Finance and Accounting Handbook

25.1 INTRODUCTION. The budgeting and control process for a multinational company is basically no different from that for domesti ...

Briefly stated, forecasting techniques follow either the traditional, fundamental approach or the more recent technical, analyti ...

(b) Corporate Level and Operating Divisions. For purposes of this chapter, we may at times refer to the parent or holding compan ...

ities. For example, there may be dual parent companies (as in the case of Royal Dutch/Shell); there may be affiliates reporting ...

(b) Annual and Total Requirements. Frequently, a negotiating period is needed dur- ing which the corporate level negotiates with ...

years; it is the recommended practice, as forecasting different exchange rates for each year will not make the forecasts more “a ...

Europe region budget is PC($) 45,000; the region maintains “control” over PC($) 10,000 which, during the budget year, may be tra ...

penditures are a function of the corporate treasurer’s overall cash controls, which are not related to the capital budgeting pro ...

needed. If, however, the local currency exchange rate strengthens compared to the budgeted exchange rate assumption, higher-leve ...

cedure to use include the sources of financing and actual capital expenditures. If fi- nancing normally takes place in the PC co ...

(ii) Conversion of Income Statement to U.S. Basis. The next step is to convert the LC- based local income statement into one tha ...

Thus, for example, it is likely that LC Company, the marketing function of Affiliate B, will have prepared its profit plan in mo ...

equalled the profit plan in local currency; thus, the negative variance shown in PC must be fully attributable to currency facto ...

current period expenses with those of the comparison period and call the result an ex- pense variance. This methodology provides ...

by the change in selling price (a negative LC 0.05), and obtain a negative price vari- ance of LC 60. The cost rate variance is ...

the variance analysis frequently stops on the before-tax income line, and we follow this convention in this chapter. The varianc ...

25 • 18 Exhibit 25.12. Income Statement. LC COMPANY Income Statement Year Ended December 31, 20X0 Actual Plan Variance Analysis ...

Continuing with our illustration: if we go through the results of our total revenue differences of PC 25, the volume and price v ...

25 • 20 Exhibit 25.13. Income Statement. LC COMPANY Income Statement Year Ended December 31, 20X0 Actual Plan Variance Analysis ...

The analytical procedures are exactly the same as those just illustrated, and the volume, price, cost rate, and expense variance ...