In Part II of the final project, you will use the worksheets and budget variance report you created in Part I to prepare a budget analysis communicating key findings to internal parties and suggesting potential changes to improve your organization?s performance. This assessment addresses the following course outcomes: (Part1 has been completed).

c Overview To be successful, all businesses must perform periodic assessments to determine the efficiency of operations. Whether you are an owner, a manager, or a frontline employee, at some time you will be affected by a budget. Preparing a budget and analyzing the results of operations in relation to the budget will help you understand how to use financial information to evaluate the effectiveness of an organization's operations. The process will also help you determine the reasons operations do not always go as planned and make decisions on changes that might need to be made to make the organization, or just your own department, more efficient. In Part I of the final project, you will use course-provided information to prepare an operating budget and compare actual operational results to the budgets, discussing potential reasons for any variances and areas to explore further. This variance analysis will allow you to make suggestions in Part II of the final project about potential changes to make your organization more efficient. You will have three deliverables for Part I of the assessment: a student worksheet, a budget variance worksheet, and a budget variance report. First, you will prepare a beginning operating budget for your company, using the student worksheet provided. Your budget will include different products with different costing methods, labor, and sales projections based on a desired profit margin. You will then compare your budget to actual results to determine and analyze variances. You will calculate and record the variances on the budget variance worksheet provided. Finally, you will provide a brief written analysis of the variances and discuss additional information needed to determine their cause. This assessment addresses the following course outcomes: Communicate budget planning to internal stakeholders for strategic planning Apply costing methods to production for supporting budget planning and decision making Prompt You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, make pricing decisions, and analyze the results of operations to determine if changes need to be made to make the company more efficient. You will be preparing a budget for the quarter July through September 2014. You are provided the following information. The budgeted balance sheet on June 30, 2014, is: Peyton Approved Budgeted Balance Sheet 30-Jun-15 ASSETS Cash $42,000 Accounts receivable 259,900 Raw materials inventory 35,650 Finished goods inventory 241,080 Total current assets 578,630 Equipment $720,000 Less accumulated depreciation 240,000 480,000 Total assets $1,058,630 LIABILITIES AND EQUITY Accounts payable $63,400 Short-term notes payable 24,000 Taxes payable 10,000 Total current liabilities 97,400 Long-term note payable 300,000 liabilities 397,400 Common stock $600,000 Retained earnings 61,230 Total Total stockholders' equity 661,230 Total liabilities and equity $1,058,630 1. Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The product's selling price is $18.00 per unit and its total product cost is $14.35 per unit. 2. The June 30 finished goods inventory is 16,800 units. 3. Going forward, company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales. 4. The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements. 5. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. 6. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per unit produced. Depreciation of $20,000 per month is treated as fixed factory overhead. 7. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable. 8. Sales representatives' commissions are 12% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,750 per month. Specifically, the following critical elements must be addressed: 1. Operating Budget Create an operating budget using the Final Project Part I Student Worksheet. a) Prepare a sales budget. Ensure accuracy of data. b) Prepare a production budget. Ensure the accuracy of your data. c) Prepare a manufacturing budget. Ensure the accuracy of your data. d) Prepare a selling expense budget. Ensure the accuracy of your data. e) Prepare a general and administrative expense budget using appropriate costing methods. 2. Budget Variance Analysis The actual quantity of material used was 31,000 with an actual cost of $7.75 per unit. The actual labor hours were 33,000 with an actual rate per hour of $15. a) Develop a variance analysis including a budget variance performance report and appropriate variances for materials and labor. Use the budget variance student worksheet provided. b) In your budget variance report, discuss each variance. What does the variance tell you? c) In addition, your budget variance report should cover the following: What needs to be investigated to determine the reason for the variance? Why? Final Project Part I Rubric Guidelines for Submission: Complete the Final Project Part I Student Worksheet and the Budget Variance Student Worksheet. Your budget variance report should be 1-3 pages, double-spaced, with one-inch margins, 12-point Times New Roman font, and APA format. Use the Final Project Part I Budget Variance Report Template to complete the report. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Exemplary Proficient Needs Improvement Not Evident Value Operating Budget: Sales Budget Prepares a sales budget, and data is accurate (100%) Prepares a sales budget, but it contains some errors (55%) Does not prepare a sales budget (0%) 12 Operating Budget: Production Budget Prepares a production budget, and data is accurate (100%) Prepares a production budget, but it contains some errors (55%) Does not prepare a production budget (0%) 12 Operating Budget: Manufacturing Budget Prepares a manufacturing budget, and data is accurate (100%) Prepares a manufacturing budget, but it contains some errors (55%) Does not prepare a manufacturing budget (0%) 12 Operating Budget: Selling Expense Budget Prepares a selling expense budget, and data is accurate (100%) Prepares a selling expense budget, but it contains some errors (55%) Does not prepare a selling expense budget (0%) 12 Operating Budget: General and Administrative Expense Budget Prepares a general and administrative expense budget and utilizes appropriate costing methods (100%) Prepares a general and administrative expense budget, but does not use appropriate costing methods (55%) Does not prepare a general and administrative expense budget (0%) 12 Budget Variance Analysis: Variance Analysis Develops a variance analysis that includes a budget variance performance report and appropriate variances for materials and labor (100%) Develops a variance analysis that includes a budget variance report, but variances for materials and labor are not appropriate (55%) Does not develop a variance analysis (0%) 12 Budget Variance Analysis: Discuss Meets \"Proficient\" criteria and demonstrates awareness of the role of variances (100%) Discusses each variance and determines what variances inform (85%) Discusses each variance, but does not determine what variances inform (55%) Does not discuss each variance (0%) 12 Budget Variance Analysis: Investigation Meets \"Proficient\" criteria, and justification is well supported with examples (100%) Identifies what needs to be investigated to determine the reason for the variance and justifies response (85%) Identifies what needs to be investigated to determine the reason for the variance, but response lacks justification (55%) Does not identify what needs to be investigated to determine reason for variance (0%) 12 Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-toread format (100%) Submission has no major errors related to citations, grammar, spelling, syntax, or organization (85%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (55%) Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas (0%) 4 Earned Total 100% CC 202 Final Project Part II Guidelines and Rubric Overview To be successful, all businesses must perform periodic assessments to determine the efficiency of operations. Whether you are an owner, a manager, or a frontline employee, at some time you will be affected by a budget. Preparing a budget and analyzing the results of operations in relation to the budget will help you understand how to use financial information to evaluate the effectiveness of an organization's operations. The process will also help you determine the reasons operations do not always go as planned and make decisions on changes that might need to be made to make the organization, or just your own department, more efficient. In Part II of the final project, you will use the worksheets and budget variance report you created in Part I to prepare a budget analysis communicating key findings to internal parties and suggesting potential changes to improve your organization's performance. This assessment addresses the following course outcomes: Communicate budget planning to internal stakeholders for strategic planning Apply costing methods to production for supporting budget planning and decision making Analyze financial information in identifying opportunities for operational efficiencies Apply ethics within the accounting decisionmaking process for supporting responsible business activities Prompt You are a manager for a pet supplies manufacturer. This responsibility requires you to create budgets, make pricing decisions, and analyze the results of operations to determine if changes need to be made to make the company more efficient. Using the workbooks and budget variance report you created for Final Project Part I, you will make recommendations about possible changes. You will look at the possibility of making some components of one product instead of buying them, and you will determine how to evaluate the company as a whole and managers in particular. You will create a budget analysis detailing your findings. Specifically, the following critical elements must be addressed in your analysis: a) Budget Process and Variances 1. Discuss the initial budget process, the variances, and potential reasons for the variances. 2. What are the changes you think the company should make based on the variance analysis? What will the changes accomplish? 3. What are the ethical considerations of the changes you have selected? Why are you recommending these particular changes? b) \"Make\" or \"Buy\": Suppose you were to consider buying a particular component of one of your products or making the product in-house. 1. What factors would you consider in such a \"make\" or \"buy\" decision? 2. What are the ethical considerations of your decision? What implications could this decision have? 3. For each option (i.e., to \"make\" or to \"buy\"), how will this impact the efficiencies of your operation? c) Nonfinancial Performance Measures 1. What suggestions would you make for nonfinancial performance measures that the company should adopt? What are the pros and cons of each suggestion? 2. What are the ethical considerations of your suggestions? Explain the significance of each. Final Project Part II Rubric Guidelines for Submission: Your budget analysis should be approximately 3 pages, double-spaced, with one-inch margins, 12-point Times New Roman font, and APA format. Use the Budget Analysis Template to complete the analysis. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value Budget Process Meets \"Proficient\" criteria, and reasoning demonstrates awareness of potential business situations Discusses the initial budget process and the variances and describes potential reasons for variances Discusses the initial budget process and the variances, but does not describe potential reasons for variances Does not describe initial budget process 11.5 Budget Process: Changes Meets \"Proficient\" criteria and demonstrates awareness of implications of making changes Determines changes the company should make based on variance analysis and identifies what will be accomplished by making these changes Determines changes the company should make based on variance analysis, but does not identify what will be accomplished by making these changes Does not determine changes the company should make 11.5 Budget Process: Ethical Considerations Meets \"Proficient\" criteria, and justification is well-supported with examples Identifies ethical considerations of changes recommended and justifies recommendations Identifies ethical considerations of changes recommended, but does not justify recommendations Does not identify ethical considerations 11.5 \"Make\" or \"Buy\" Meets \"Proficient\" criteria, and claims are supported with evidence Describes factors that should be taken into consideration in a \"make\" or \"buy\" decision Describes factors that should be taken into consideration in a \"make\" or \"buy\" decision, but with errors or gaps in the discussion Does not describe factors that should be taken into consideration in a \"make\" or \"buy\" decision scenario 11.5 \"Make\" or \"Buy\": Ethical Considerations Meets \"Proficient\" criteria and demonstrates a nuanced understanding of the relationship between ethical views and implications Identifies ethical considerations and implications of \"make\" or \"buy\" decision Identifies either ethical considerations or implications of decision, but not both Does not identify ethical considerations or implications of decision 11.5 \"Make\" or \"Buy\": Impact Meets \"Proficient\" criteria and demonstrates awareness of business operations Describes how \"make\" or \"buy\" decision was reached and how it will impact the efficiencies of operation Describes how decision was reached, but does not address how it will impact efficiencies of operation Does not describe how decision was reached 11.5 Nonfinancial Performance Measures Meets \"Proficient\" criteria, and suggestions incorporate a wellrounded view of the business Identifies suggestions for nonfinancial performance measures the company should adopt and lists the pros and cons of each Identifies suggestions for nonfinancial performance measures the company should adopt, but does not list the pros and cons of each Does not identify suggestions for nonfinancial performance measures the company should adopt 11.5 Nonfinancial Performance Measures: Ethical Considerations Meets \"Proficient\" criteria, and explanation is exceptionally clear and contextualized Identifies the ethical considerations of suggestions and explains the significance of each Identifies the ethical considerations of suggestions, but does not explain the significance of each Does not identify the ethical considerations of suggestions 11.5 Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format Submission has no major errors related to citations, grammar, spelling, syntax, or organization Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 8 Earned Total 100