Checking my work Please fix what answers are wrong Flexible Budget Performance Report Project Kelseys Frozen Confectionaries buys and distributes single serve ice cream treats, popsicles, etc , such as those sold at convenience stores, sporting events and amusement parks Download the file containing Kelseys budget assumptions and actual figures for June The file also contains a draft for both a 1) master budget performance report, and 2) a flexible budget performance report You are allowed to work together with classmates Each student will submit a completed project Submit this project in the D2L dropbox by 11 00 pm on Tuesday, November 1 st You will need to submit the direction packet pages and your Excel file Label your direction packet Full name Project 3 Label your Excel file the same way DIRECTIONS for Master Budget Performance Report Use the budget assumptions, along with Excel formulas, to populate the Master Budget column Note Your formulas must work such that if ANY of the budget assumptions change, the new assumptions ripple through the entire budget Part of your grade will be based on whether you correctly formulated the cells Do NOT TYPE A NUMBER IN ANY CELL Use a formula to calculate the variance in cell H7 (Actual Budget) Copy and paste the formula to the rest of the cells in the column Leave as positive or negative, rather than absolute values Use a formula to calculate the Variance percentage NOTE The percentage is the variance as a percent of the Master Budget Copy and paste the formula to the rest of the cells in the column All variance percentages should show 1 place after the decimal point Format cells appropriately (dollar signs using the accounting or currency format, underlines, double underlines, zero decimal places for dollar amounts, etc ,) Use the If statement function to show the variances as U or F The If statement can be found under Formulas, Logical Example IF(H7 0, F , U ) This formula means If cell H7 0 or H7 0, then mark as F If not greater than or equal to 0, mark as U Be careful with revenues and expense variances since youll want them to be opposite of one another Any variance of 0 should be shown as F since it meets budget expectations Check your answers using the following check figures Budgeted CM $301,000 Budgeted Op Inc $211,000 Variance for Commissions $8,685 Variance percentage for Commissions 17 4 , Unfavorable Answer the following questions What is the master budget variance for Shipping exp $ , , U or F What does it mean What is the master budget variance for Lease Exp $ , , U or F What does it mean Using management by exception, along with the investigation rule shown with the budget assumptions, which variances would you investigate List them Now check to see if everything ripples through the budget if you change an assumption Try changing the assumed sales volume to 20,500 and Shipping expense to $2 10 per case You should have a new total variance for operating income of $21,287, 9 8 variance, F Change the sales volume assumption back to $20,000 and the shipping expense assumption back to $2 00 DIRECTIONS for Flexible Budget Performance Report Copy and Paste all of the line items (account names) from the master budget into the Flexible Budget Performance report Copy and Paste all of the actual figures from the master budget to the actual column of the Flexible Budget Performance report Formulate the Master Budget figures by referencing (e g , B7) the appropriate cells in the first performance report By doing so, if any assumptions change, they will ripple through BOTH performance reports Hint Put G7 into cell J33 copy into the remaining cells Build the Flexible Budget by using the ACTUAL SALES VOLUME achieved along with the original budget assumptions This is very similar to building a master budget, except you are using actual sales volume Assume the actual sales volume achieved is in the same relevant range as the original budget assumptions Try using the accounting or currency settings to get dollar signs, commas, and brackets on negative numbers Add underlines and double underlines as needed Head the appropriate column for the Volume Variance and then use Excel formulas to populate the cells in that column (e g , H33 J33) Once you get the first cell done, copy and paste the formula to the other cells Head the appropriate column for the Flexible Budget Variance and then use Excel formulas to populate the cells in that column (e g F33 H33) Again, copy and paste the formulas to the other cells Format the report appropriately (Dollar signs, underscores, double underscores, etc ,) Use the following check figures to check your formulas so far Shipping Expense $44,213 $1,293 $42,920 $2,920 $40,000 Lease on Distn center $15,500 $ (1,500) $17,000 $ $17,000 To save time, we wont add the U and F designations to the flexible budget performance report However, youll need to mentally figure out which way they go The interpretation of the volume variance is a little problematic because it compares two budgets, rather than budget vs actual HINT Think of the MASTER BUDGET as the companys target when determining whether the volume variance should be designated as a U or F Answer the following questions What is the Flex budget variance for operating income $ F or U What is the Volume variance for operating income $ F or U Does the combination of the flex budget variance and volume variance sum to the master budget variance for operating income Y or N Should it always sum to the master budget variance Y or N How much of the master budget variance for Sales revenue was caused by an unanticipated increase in volume F or U How much of the master budget variance for Commissions Exp was caused by an unanticipated increase in volume F or U How much of the master budget variance for Advertising Expenses was caused by an unanticipated increase in volume F or U How much of the master budget variance for CGS was caused by some factor other than volume (Hint this is NOT a manufacturing business) $ F or U What could account for this variance How much of the master budget variance for Sales Revenue was caused by some factor other than volume $ F or U What could account for this variance How much of the master budget variance for Advertising Exp was caused by some factor other than volume $ F or U What could account for this variance Auditors always look at the variances between actual and budget or actual and last year Say you were auditing this client and they gave you the following story (below) Is the story consistent with the overall pattern of variances Which elements of the story are consistent with the explanations Which variances are inconsistent, or left unexplained Be sure to analyze every line item on the budget (SEE NEXT PAGE ) Client Story In order to motivate our sales force to increase sales, we decided to increase our commissions and salaries and increase marketing At the same time, our supplier increased its prices, and we felt we could pass that cost increase on to our customers in the form of price increase However, with the additional pressure to make sales, coupled with the increased sales price, we had to loosen credit terms on sales We also had to lease a little more distribution space and acquire another truck to handle the volume increase Our shipping expense relates to gasoline on deliveries Luckily, gas prices went down from what we originally expected this year In the table below, classify EACH ACCOUNT on the budget according to whether the variances in the performance report are consistent or inconsistent with the clients story, or unexplained by the clients story Place an X in the appropriate column If the Flexible Budget Variance and Sales Volume Variance differ with respect to one account (i e , one is consistent and one is inconsistent) then indicate which belongs in which column

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 11, 2024

Checking my work!! Please fix what answers are wrong!! Flexible Budget Performance Report Project Kelseys Frozen Confectionaries buys and distributes single-serve ice cream treats, popsicles,

Checking my work!! Please fix what answers are wrong!!

Flexible Budget Performance Report Project

Kelseys Frozen Confectionaries buys and distributes single-serve ice cream treats, popsicles, etc., such as those sold at convenience stores, sporting events and amusement parks. Download the file containing Kelseys budget assumptions and actual figures for June. The file also contains a draft for both a 1) master budget performance report, and 2) a flexible budget performance report.

You are allowed to work together with classmates. Each student will submit a completed project. Submit this project in the D2L dropbox by 11:00 pm on Tuesday, November 1^st. You will need to submit the direction packet pages and your Excel file. Label your direction packet Full name Project 3. Label your Excel file the same way.

DIRECTIONS for Master Budget Performance Report:

Use the budget assumptions, along with Excel formulas, to populate the Master Budget column. Note: Your formulas must work such that if ANY of the budget assumptions change, the new assumptions ripple through the entire budget. Part of your grade will be based on whether you correctly formulated the cells. Do NOT TYPE A NUMBER IN ANY CELL!!!

Use a formula to calculate the variance in cell H7: (Actual Budget). Copy and paste the formula to the rest of the cells in the column. Leave as positive or negative, rather than absolute values.

Use a formula to calculate the Variance percentage. NOTE: The percentage is the variance as a percent of the Master Budget. Copy and paste the formula to the rest of the cells in the column. All variance percentages should show 1 place after the decimal point.

Format cells appropriately (dollar signs using the accounting or currency format, underlines, double underlines, zero decimal places for dollar amounts, etc.,).

Use the If statement function to show the variances as U or F. The If statement can be found under Formulas, Logical. Example: =IF(H7>=0,"F","U"). This formula means If cell H7>0 or H7=0, then mark as F. If not greater than or equal to 0, mark as U. Be careful with revenues and expense variances since youll want them to be opposite of one another. Any variance of 0 should be shown as F since it meets budget expectations.

Check your answers using the following check figures: Budgeted CM= $301,000; Budgeted Op Inc. = $211,000; Variance for Commissions = $8,685; Variance percentage for Commissions = 17.4 %, Unfavorable.

Answer the following questions:

What is the master budget variance for Shipping exp.? $_____________, ___%, U or F? What does it mean?

What is the master budget variance for Lease Exp? $______________, _____%, U or F? What does it mean?

Using management by exception, along with the investigation rule shown with the budget assumptions, which variances would you investigate? List them.

Now check to see if everything ripples through the budget if you change an assumption. Try changing the assumed sales volume to 20,500 and Shipping expense to $2.10 per case. You should have a new total variance for operating income of $21,287, 9.8% variance, F.

Change the sales volume assumption back to $20,000 and the shipping expense assumption back to $2.00.

DIRECTIONS for Flexible Budget Performance Report:

Copy and Paste all of the line items (account names) from the master budget into the Flexible Budget Performance report.

Copy and Paste all of the actual figures from the master budget to the actual column of the Flexible Budget Performance report.

Formulate the Master Budget figures by referencing (e.g.,=B7) the appropriate cells in the first performance report. By doing so, if any assumptions change, they will ripple through BOTH performance reports. Hint: Put +G7 into cell J33 & copy into the remaining cells.

Build the Flexible Budget by using the ACTUAL SALES VOLUME achieved along with the original budget assumptions. This is very similar to building a master budget, except you are using actual sales volume. Assume the actual sales volume achieved is in the same relevant range as the original budget assumptions. Try using the accounting or currency settings to get dollar signs, commas, and brackets on negative numbers. Add underlines and double underlines as needed.

Head the appropriate column for the Volume Variance and then use Excel formulas to populate the cells in that column (e.g., +H33-J33). Once you get the first cell done, copy and paste the formula to the other cells.

Head the appropriate column for the Flexible Budget Variance and then use Excel formulas to populate the cells in that column (e.g. +F33-H33). Again, copy and paste the formulas to the other cells.

Format the report appropriately (Dollar signs, underscores, double underscores, etc.,) Use the following check figures to check your formulas so far:

Shipping Expense	$44,213	$1,293	$42,920	$2,920	$40,000

Lease on Distn center	$15,500	$ (1,500)	$17,000	$ -	$17,000

To save time, we wont add the U and F designations to the flexible budget performance report. However, youll need to mentally figure out which way they go. The interpretation of the volume variance is a little problematic because it compares two budgets, rather than budget vs. actual. HINT: Think of the MASTER BUDGET as the companys target when determining whether the volume variance should be designated as a U or F.

Answer the following questions:

What is the Flex budget variance for operating income? $_____________ F or U?

What is the Volume variance for operating income? $____________F or U?

Does the combination of the flex budget variance and volume variance sum to the master budget variance for operating income? Y or N? Should it always sum to the master budget variance? Y or N?

How much of the master budget variance for Sales revenue was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for Commissions Exp. was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for Advertising Expenses was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for CGS was caused by some factor other than volume? (Hint: this is NOT a manufacturing business). $__________ F or U? What could account for this variance?

How much of the master budget variance for Sales Revenue was caused by some factor other than volume? $__________ F or U? What could account for this variance?

How much of the master budget variance for Advertising Exp. was caused by some factor other than volume? $__________ F or U? What could account for this variance?

Auditors always look at the variances between actual and budget or actual and last year. Say you were auditing this client and they gave you the following story (below). Is the story consistent with the overall pattern of variances? Which elements of the story are consistent with the explanations? Which variances are inconsistent, or left unexplained? Be sure to analyze every line item on the budget. (SEE NEXT PAGE.)

Client Story: In order to motivate our sales force to increase sales, we decided to increase our commissions and salaries and increase marketing. At the same time, our supplier increased its prices, and we felt we could pass that cost increase on to our customers in the form of price increase. However, with the additional pressure to make sales, coupled with the increased sales price, we had to loosen credit terms on sales. We also had to lease a little more distribution space and acquire another truck to handle the volume increase. Our shipping expense relates to gasoline on deliveries. Luckily, gas prices went down from what we originally expected this year.

In the table below, classify EACH ACCOUNT on the budget according to whether the variances in the performance report are consistent or inconsistent with the clients story, or unexplained by the clients story. Place an X in the appropriate column. If the Flexible Budget Variance and Sales Volume Variance differ with respect to one account (i.e., one is consistent and one is inconsistent) then indicate which belongs in which column.