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  • Subject Name : Management

Data Analysis and Recommendation Assignment

In this case study, A “Shovel” is a hydraulic excavator used to extract ore from the ground onto a truck for transport, it is used in the mining for an Open -pit mining operation. Mining unit has been able to get the detail data for the trucks working for their speed and ideal time minute by minute. The Company is also have high cost equipment’s and high fixed cost and overheads. The expenses were budgeted and now the actual has also been received.

This data is analysed for both variance analysis of budget vs actual and also for the time and speed data for the trucks to identify the trends if any. Results are shared as below to find to a conclusion to provide a recommendation. This table can be found in the attached Excel file under the “Truck Geospatial Output” tab. The geospatial data for the mine are provided, After analysing the available data, which is only for one day, no specific trend was identified may be because the data is only for one day which can be a normal idle day as per the efficiency of the Truck is concerned.

  • All the data is tabulated in the as per table below to calculate the overall scenario and on the basis of that few charts and trend lines have been created which show the following:-
  • Average speed of all trucks range similar and are between 8.2 to 10.41, so not very high variance
  • There is not trend in night vs day working
  • Truck H11 seems to be most efficient among all four in terms of KM and Total Time Worked
 

H10

H11

H12

H13

 

Total

Day

Night

Total

Day

Night

Total

Day

Night

Total

Day

Night

Average Speed of Truck

9.15

9.18

9.56

9.30

8.28

10.43

8.62

8.00

9.40

8.86

8.26

9.52

Total Time Worked in Hours

7.19

3.35

3.44

8.02

4.05

3.57

7.54

3.44

4.1

7.58

3.51

4.07

Average Kilometres done

0.078

0.080

0.077

0.07

0.06

0.080

0.07

0.07

0.06

0.072

0.72

0.72

Total Kilometres

210.5

105.4

105.1

213.

99.3

114.5

199.

96.0

103

203.

99.1

104.

 

 

H10

H11

H12

H13

 

Total

Total

Total

Total

Total Time Worked in Hours

7.19

8.02

7.54

7.58

Total Kilometers

210.566

213.95

199.501

203.957

The financial information is processed to identify the reasons for the difference between budget and actual. Suggestions are provided on improving the budgeting process and the benefits of improving operations (e.g. create three scenarios may be there which will improve the financial position of the mine)

On the basis of data available Variances are calculated for Revenue , Variable Cost , Fixed Cost and Total Cost and it is projected in bar charts with trend line showing the variance % also.

Monthly variance shows that is a good amount of variance in budget vs actual, which is an indication of gaps in the budgeting process. To improve the process we can identity the gaps in the overall budgeting process as shared in the recommendation.

Excel File attached

Total Fixed Cost

 

Budget

1,28,33,333.33

   

Actual

1,61,83,333.33

Other cost

 

Budget

3,53,33,333.33

   

Actual

3,74,73,706.33

TOTAL COST/mnth

 

Budget

4,81,66,666.67

   

Actual

5,36,57,039.67

     

-54,90,373.00

     

-11%

Budget Variance of 11% is treated as huge variance and specially in the fixed cost also there is variance 26% which can easily be reduced

Recommendation:

Budgets are prepared on the basis of previous data , market research and current information and future prediction or forecast.

Management in this case should revisit their budgeting process by :

  • Breaking the whole budgets into different activities and analysing the variances activity wise to identify the gap , currently two broad numbers are Variable cost and Fixed cost
  • Variance in monthly Variable cost though there is a difference in budget vs actual but it is consistent except only in the month of June
  • Budgets for Variable cost is always higher whereas Actuals are lower. But overall Total Variance shows that Actuals are more than Budgets
  • This gap is majorly because of Fixed cost by 26%
  • So the management needs to improve the Budgeting of fixed cost , or improvement in terms of Asset utilization planning
  • Management should fix the rate of Fixed cost / hour or truck for better and accurate budgets
  • Standard Costing method can be applied for various activities to define the budgeted rates for all activities to observe the fixed cost properly and reduce the difference between Actual vs Budgeted Fixed Cost
  • Idle time can be found from speed graphs and trucks can be put to use in that time to get more output which will reduce the overhead cost /day /truck

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Management Assignment Help

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