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MBA 6100 Case Study #2

Caseys Cereal is preparing their 2017 budget. They want to prepare a flexible budget for use each month. They estimate sales/production will be between 500,000 and 600,000 boxes of Crunchy Os cereal per month.

Question 1: Prepare a flexible budget in Excel for Caseys Cereal.

• Show the flexible budget based on 500,000 units (boxes) produced.
• Show the flexible budget based on 600,000 units (boxes) produced.
• Show the flexible budget cost formulas for Caseys Cereal.
• Explain the benefit of flexible budgets and when they should be used.

Question 2: The months of January and February 2017 are complete, and Caseys Cereal wants to compare their budget to their actual results. Actual results are shown in the table above.

• Show the flexible budget based on actual units produced for each month.
• Compare actual results to budgeted results (Favorable or Unfavorable) for each month.
• Provide possible explanations for the favorable and unfavorable variances. Was net operating income better or worse than budget? Provide recommendations for Caseys Cereal.

Calculations and backup should be completed and submitted in Excel. Use proper Income Statement formatting. Analysis can either be typed into cells in Excel (formatted to be easily legible) or typed into a text box in Excel.

MBA 6100 Case Study #2 Casey's Cereal is preparing their 2017 budget. They want to prepare a flexible budget for use each month. They estimate sales/production will be between 500,000 and 600,000 boxes of Crunchy O's cereal per month. Question 1: Prepare a flexible budget in Excel for Casey's Cereal. a) Show the flexible budget based on 500,000 units (boxes) produced. b) Show the flexible budget based on 600,000 units (boxes) produced. c) Show the flexible budget cost formulas for Casey's Cereal. d) Explain the benefit of flexible budgets and when they should be used. Question 2: The months of January and February 2017 are complete, and Casey's Cereal wants to compare their budget to their actual results. Actual results are shown in the table above. a) Show the flexible budget based on actual units produced for each month. b) Compare actual results to budgeted results (Favorable or Unfavorable) for each month. c) Provide possible explanations for the favorable and unfavorable variances. Was net operating income better or worse than budget? Provide recommendations for Casey's Cereal. Calculations and backup should be completed and submitted in Excel. Use proper Income Statement formatting. Analysis can either be typed into cells in Excel (formatted to be easily legible) or typed into a text box in Excel. Students are expected to work independently