Requirements 1. Upon reviewing the budget results, what is your reaction to the

Question

Requirements 1. Upon reviewing the budget results, what is your reaction to the news that your boss is unhappy with your Consider how many cases of energy drinks were sold and about your ability to control costs in your results? response. epare a flexible budget report that reflects an accurate depiction of your performance, accounting for changes in volume. If possible, complete this in Microsoft Excel. 3. Expl ain your revised performance report. How much of the original variance is attributable to your performance? What does the rest of the variance represent? 4. Consider possible explanations behind the variances in your revised performance report. For inst worked with the supplier of your direct materials to get a better price-what impact did that have on your performance report? Additionally explain how you can investigate the variances in more explanations behind the cause. ance you depth to give you better 5. Write a memo to Mrs. Riley to explain your interpretation of your performance, highlighting the positive aspects and including a high-level action plan for further improvement of the produc

Explanation / Answer

W X Y Z=X-Y Master Budget Actual Flexible Budget Variance F/U Sales: Number of cases                  175,000                180,000               180,000 Revenue($65/case) $        11,375,000 $      11,520,000 $     11,700,000 $ (180,000) U Variable expense: Direct Material($35/case) $          6,125,000 $        6,210,000 $       6,300,000 $   (90,000) F Direct Labor($10/case) $          1,750,000 $        1,746,000 $       1,800,000 $   (54,000) F Variable overhead($5/case) $              875,000 $            810,000 $           900,000 $   (90,000) F Contribution Margin $          2,625,000 $        2,754,000 $       2,700,000 $      54,000 F Direct Fixed Expenses: Direct fixed overhead $540,000 $535,000 $540,000 $      (5,000) F Direct operating expenses $110,000 $120,000 $110,000 $      10,000 U Segment margin $          1,975,000 $        2,099,000 $       2,050,000 $      49,000 F Common Fixed expense: Allocated to factory expenses $1,500,000 $1,750,000 $1,500,000 $   250,000 U Operating Income(Loss) $              475,000 $            349,000 $           550,000 $ (201,000) U 1 Since the activity lavel is higher, the actual costs for higher quantity will be higher Variances cannot be measured by comparing actual costs with the fixed budget 3 Segment Margin has a favourable variance. The Variance would have been higher ,but the REVENUE variance was adverse to the extent of $180,000 4 Allocated Factory overhead expense was higher by $250,000 on which the profit center manager has no control

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