Is it now $20$ September $2024.$ The Senior Management Team $($SMT$)$ has requested a report on the production expense variations of protein

bars over the last quarter. That includes the manufacturing of peanut butter and the protein bars themselves.

You have the following conversation with Akida Agu, Finance Manager:

"I have attached the variances, which have been calculated by one of our Finance Assistants. $($Reference Material$).$ I have also collected

some information regarding some incidents which occurred over the last quarter. They are as follows:

A machine used for the shelling of peanuts developed a fault where a significant quantity of peanuts was lost along with the removed

shells.

The fault was discovered after $10$ days, at which point it was estimated that a further $6$ days would be needed to complete the repair.

Thus, the machine was idle for $6$ days.

After the inventory of shelled peanuts was exhausted, some production employees were idle for $2$ days.

The Head of Peanut Butter Production made a decision to form a team of employees to shell the peanuts by hand until the repair was

effected. This was an additional process not usually done by employees.

Whey powder prices in the market have dropped slightly over the last $3$ months.

The solar energy generation system was able to generate more electricity than usual due to strong sunlight intensity. Thus, less

energy was purchased from the electricity grid.

Please prepare a report to the SMT which explains:

The potential causes for each of the variances and any linkages between the causes of the variance. $($Subtask $($a$))$

It seems to me that the costs of production have been on the rise over the past year or so$.$ It also seems to me that we are getting

haphazard outputs from our variances, and I am wondering whether traditional budgeting is a bit too restrictive. I have been reading about

beyond budgeting, and I think it would be a good idea to use a beyond budgeting approach in the business.

Please prepare a briefing paper for me explaining:

The characteristics and benefits of 'beyond budgeting' with regard to our current circumstances.$($Subtask $($b$))$

On a different note, we have just received a communication from our peanut supplier where he has mentioned difficulties in supplying

our last order on time. To be specific, he says he is unable to deliver the required quantity on the specified date and suggests placing

larger orders well in advance as a solution in the future. Fortunately, this particular incident will not halt our production as we have

some leftovers from the current quarter in addition to our buffer inventory. However, in the future it could cause a serious disruption to

our production schedules. The solution proposed by the supplier means that we would have to place one single order for the

requirement of peanuts for the quarter and it would create some issues with the EOQ model which we have been using to place orders.

I would have to discuss the above matter and possible solutions as well during the Board Meeting. Therefore, could you please include

the following in the briefing paper:

How can we strengthen our relationship with the supplier? Also please mention whether we need to look at sourcing from other suppliers

and how we could do so if needed? $($Subtask $($c$))$

Notes:

Idle time is not budgeted for.

Variable overheads are absorbed for peanut butter production based on machine hours.