Sam Chase is the Finance Director of Flowers.co.ke, an Internet company that enables customers to order home deliveries of flowers by accessing its website. Flowers.co.ke has a network of florists ('strategic partners') who do the physical delivery of flowers. Flowers.co.ke has a group of representatives that continually visit florists and nurseries. This group monitors product and service quality and explores new products or new partners.
Chase is concerned with the efficiency and effectiveness of the finance function at Flowers.co.ke. He collects the following information for three finance activities in 2015:

The budgeted amounts are based on an analysis of costs in past periods at Flowers.co.ke. The output measure is the number of deliveries, which is assumed to be the same as the number of remittances. Debtors is an output-unit-level-driven cost, whereas creditors and travel and expense are batch-driven costs.
Required
1. Prepare a flexible-budget-based report explaining difference between budgeted and actual costs for each of the three finance activities in 2015. Comment on the results.
2. Why might the variances computed in requirement 1 pertain to efficiency but not effectiveness?
3. How might Chase monitor the effectiveness of the three finance processes in this exercise?

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Budgeted Budgeted total cost Actual total volume of activity 212 150 948 000 total volume of activity Finance activity Creditors Debtors Travel and expenses Activity measure Number of invoices Number of remittances Number of expense reports of activity KSh580 000 639 000 15 200 Actual cost of process KSh594 020 711 000 13 986 200 000 1 000 000 2 000 1890