Bob Moyer of Mile High Cycles has asked you, a member of their Financial Planning and Analysis (FP&A) team, to evaluate the companys results by comparing actual to expected performance (using variance analysis). I provided every piece of information necessary for this assignment, and am not missing anything.

1. First, gain an understanding of the three processes for yourself (frame, wheel, and final assembly). Summarize these processes in your own words, and at the same time identify where within these processes variation could arise leading to variation in costs (this could be variation in a positive or negative way). Opine on the relative amount of variation. [The goal of this section is for you to develop an expectation in your mind, that if you do see variation in the analysis, you have an understanding of what may be causing the variation almost as if you are hypothesizing ahead of time where there is greater likelihood for variation in the companys processes]. This should be done before you do any variance analysis calculations.

2. Compute the following variances for Mile High Cycles.
3. In addition, assume that Bob Moyer has the following employees at Mile High Cycles:. Floyd Outlandiss, sales manager - responsible for bicycle pricing; sales to customers; timing of customer deliveries; advertising programs; customer complaints. Fitz Matoosh, production manager - responsible for choice of production levels; production scheduling; hiring and firing production employees/supervisors; determining acceptable range for grade of inputs; maintenance of production equipment. Shelly B. Swift, purchasing manager - responsible for choosing vendors; negotiating purchase prices and discounts; timing of purchases; grade of materials purchased (within ranges specified by Fitz). Given the variances you identified, (1) develop a story as to how and why production varied in the way it did from expectations (2) what decisions did Floyd, Fitz, and Shelly make or what actions did they take that lead to these variations and (3) your assessment of their performance in their job roles including a justification of your assessment.

4. You are to submit

5. An excel document, using the template provide. On a third excel tab, create a variance analysis using the crown method and using CELL REFERNCES to Exhibit 1 and Exhibit 2.
6. A case write up of no more than three typed pages (12 pt Times New Roman, 1.5 spacing). I suggest the following format/ordering for the case write up
7. • 1^st: Question 1 (should be done before completing the Variance Analysis)
8. • 2^nd: describe the results of your variance analysis for each category
     • Sales
     • Framing Assembly
     • Wheel Assembly
     • Final Assembly
     • Overhead categories
9. • In your description of each provide your responses to Question 3
     • Tip: for example - what happened with this assembly process and why, which of the three employees could have caused this result and how (i.e., by what actions or decisions), and do you think they did well in their role, or if not, how could they have improved their actions/decisions.
     • The responses to each of these may be interconnected so you can bridge the categories together as much as you need to, to help tell a cohesive story of what happened within Mile High Cycle during 2004.

2. Compute the following variances for Mile High Cycles. for sales: sales price variance assume budgeted sales of 9,700 bicycles for total budgeted sales of $11,145,300 price volume variance and actual sales of 11,000 bicycles for total actual sales of $10,989,000 for frame assembly: steel tubing price variance steel tubing efficiency variance steel tubing quantity variance paint price variance paint efficiency variance paint quantity variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for wheel assembly parts price variance parts efficiency variance parts quantity variance rework spending variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for final assembly parts price variance parts efficiency variance parts quantity variance rework spending variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for production fixed overhead: rent budget variance office staff budget variance depreciation budget variance other costs spending variance (ignore note on Exhibit 1 of case and assume all fixed, with the below budget & actual details): budget actual Supervision $525,000 $725,000 Maintenance, production machines $225,000 $125,000 Overhead production volume variance (Applied vs Budgeted Overhead) 2004 Production Budget Expected Production (Bicycles) 10,000 Input (unit) Rate (unit) Cost Frame Assembly Steel Tubing Paint Labor Total Frame Ibs 1,250.00 gallons hrs 30.00 $/1b 20.00 $/gallon 15.00 $/hr 3,300,000.00 25,000.00 1,500,000.00 4,825,000.00 Wheel Assembly Parts Labor Total Wheel 10,000.00 kits 5,000.00 hrs 120.00 $/kit 13.00 $/hr 1,200,000.00 65,000.00 1,265,000.00 Final Assembly Parts Labor Total Final 10,000.00 kits 7,500.00 hrs 350.00 $/kit 14.00 $/hr 3,500,000.00 105,000.00 3,605,000.00 350.00 $/kit 14.00 $/hr 3,500,000.00 105,000.00 3,605,000.00 3 Final Assembly 3 Parts 10,000.00 kits Labor 7,500.00 hrs 1 Total Final 2 3 4 Overhead 5 Rent 3 Office Staff 7 Depreciation 3 Other Costs (Supervision) Other Costs (maintenance, prod machines) Total OH 1 250,000.00 100,000.00 100,000.00 525,000.00 225,000.00 1,200,000.00 2 3 Total Annual Costs 4 5 5 Sales 9,700.00 2004 Actual Production Costs Actual Production (Bicycles) 10,800 Input (unit) Rate (unit) Cost Ibs Frame Assembly Steel Tubing Paint Labor Total Frame 1,375.00 gallons hrs 31.50 $/16 20.50 $/gallon 15.25 $/hr 3,572,100.00 28,187.50 1,528,050.00 5,128,337.50 10,800.00 kits 122.00 $/kit Wheel Assembly Parts Rework parts Labor Total Wheel 1,317,600.00 25,000.00 74,250.00 1,416,850.00 5,500.00 hrs 13.50 $/hr 10,800.00 kits 367.00 $/kit Final Assembly Parts Rework Parts Labor Total Final 3,963,600.00 45,000.00 116,000.00 4,124,600.00 8,000.00 hrs 14.50 $/hr Overhead Rent Office Staff Depreciation Other Costs (Supervision) Other Costs (maintenance, prod machines) Total OH 250,000.00 100,000.00 100,000.00 725,000.00 125,000.00 1,300,000.00 . . Total Annual Costs Sales 11,000.00 2. Compute the following variances for Mile High Cycles. for sales: sales price variance assume budgeted sales of 9,700 bicycles for total budgeted sales of $11,145,300 price volume variance and actual sales of 11,000 bicycles for total actual sales of $10,989,000 for frame assembly: steel tubing price variance steel tubing efficiency variance steel tubing quantity variance paint price variance paint efficiency variance paint quantity variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for wheel assembly parts price variance parts efficiency variance parts quantity variance rework spending variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for final assembly parts price variance parts efficiency variance parts quantity variance rework spending variance labor price (a.k.a. rate) variance labor efficiency variance labor quantity variance for production fixed overhead: rent budget variance office staff budget variance depreciation budget variance other costs spending variance (ignore note on Exhibit 1 of case and assume all fixed, with the below budget & actual details): budget actual Supervision $525,000 $725,000 Maintenance, production machines $225,000 $125,000 Overhead production volume variance (Applied vs Budgeted Overhead) 2004 Production Budget Expected Production (Bicycles) 10,000 Input (unit) Rate (unit) Cost Frame Assembly Steel Tubing Paint Labor Total Frame Ibs 1,250.00 gallons hrs 30.00 $/1b 20.00 $/gallon 15.00 $/hr 3,300,000.00 25,000.00 1,500,000.00 4,825,000.00 Wheel Assembly Parts Labor Total Wheel 10,000.00 kits 5,000.00 hrs 120.00 $/kit 13.00 $/hr 1,200,000.00 65,000.00 1,265,000.00 Final Assembly Parts Labor Total Final 10,000.00 kits 7,500.00 hrs 350.00 $/kit 14.00 $/hr 3,500,000.00 105,000.00 3,605,000.00 350.00 $/kit 14.00 $/hr 3,500,000.00 105,000.00 3,605,000.00 3 Final Assembly 3 Parts 10,000.00 kits Labor 7,500.00 hrs 1 Total Final 2 3 4 Overhead 5 Rent 3 Office Staff 7 Depreciation 3 Other Costs (Supervision) Other Costs (maintenance, prod machines) Total OH 1 250,000.00 100,000.00 100,000.00 525,000.00 225,000.00 1,200,000.00 2 3 Total Annual Costs 4 5 5 Sales 9,700.00 2004 Actual Production Costs Actual Production (Bicycles) 10,800 Input (unit) Rate (unit) Cost Ibs Frame Assembly Steel Tubing Paint Labor Total Frame 1,375.00 gallons hrs 31.50 $/16 20.50 $/gallon 15.25 $/hr 3,572,100.00 28,187.50 1,528,050.00 5,128,337.50 10,800.00 kits 122.00 $/kit Wheel Assembly Parts Rework parts Labor Total Wheel 1,317,600.00 25,000.00 74,250.00 1,416,850.00 5,500.00 hrs 13.50 $/hr 10,800.00 kits 367.00 $/kit Final Assembly Parts Rework Parts Labor Total Final 3,963,600.00 45,000.00 116,000.00 4,124,600.00 8,000.00 hrs 14.50 $/hr Overhead Rent Office Staff Depreciation Other Costs (Supervision) Other Costs (maintenance, prod machines) Total OH 250,000.00 100,000.00 100,000.00 725,000.00 125,000.00 1,300,000.00 . . Total Annual Costs Sales 11,000.00