Questions: A) Redraft the budget to show the 2015 static budget, flexible budget, actual, and variance from the flexible budget, with contribution margin separately identified?
Questions:
A) Redraft the budget to show the 2015 static budget, flexible budget, actual, and variance from the flexible budget, with contribution margin separately identified?
B) Prepare a Quantitative analysis to demonstrate to management the main causes for the variance from the flexible budget, as a both for taking corrective action and for explaining the variance from the static budget to the bank manager?
C) if expected 2016 operating results are similar to 2015, explain to the bank manager how much of the loan you would be able to repay from 2016 earning. (Assume no change in account receivable and account payable)?
D) If competition became intense in 2016 and argus was operating well below capacity at 85,000 units, explain with calculations the minimum bid you would make on an order for 10,000 units?
E) What Changes to the management accounting and reporting system for argus electronics would you propose?
I Solved part A, Please consider the rest of the part which is B, C, D, E.
File Homensert Page Layout Formulas Dta Review View Calibri Wrap Text General E .0 .0 Conditional Format Cell Inser Formatting as Table Styles Merge & Center % , Format Painter Clipboard Alignment Number Actual Budget Sales Price Variance Flexible Budget 2 Sales- Units 3 Sales- Dollar 4 Cost of sales: Sales Quantity Variance Static Budget 1,10,000 $125,000$$2750000 1,05,000 $2520,000 0 1,05,000 $2625,000 5,000U $105,000uU Material Labour 4,21,000 8,45,000 2,05,000 3,03,000 17,74,000 7,46,000 23,15,000 1000U 5000U 5000F 3000U 4000U 109,000U 100,000F 4,20,000 8,40,000 2,10,000 3,00,000 17,70,000 8,55,000 24,15,000 20,000F 40000F 10000F 0 70,000F 55,000U 115,000F 4,40,000 8,80,000 2,20,000 3,00,000 18,40,000 9,10,000 25,30,000 Variable Overhead Fixed facory overhead 10 Gross Profit 11 Contribution Margin 12 Selling Expenses: Variable 2,09,000 1,02,000 1,97,000 5,08,000 2,38,000 95,000 2,10,000 1,00,000 2,00,000 5,10,000 107,000U (GP-SE) 345000 42B,000F (PBIT X40%) 138000 $64.2,000U (PBIT-IT) $207000 1,000F 2000U 13,000F 2,000F 10000F 0 0 10,000F 45,000U 18,0000F 27,000U 2,20,000 1,00,000 2,00,000 5,20,000 3,90,000 1,56,000 $234000 Fixed 15 Administraton-fixed 16 Total expenses 17 Profit before income tax 18 Income Tax (40% of profit before tax) 19 Net Income 20 $143000 ANCHORVALE ELECTRONICS LIMITED 2015 Budget Prepared for Bank Loan Dollars in (ooos) Variance 5000U $ 230U Static Budget Actual $ 2150 440 220 2520 Cost of sales. 19F 66F 164U 910 46 Seling expenses 209 102 197 11F 2U ied 100 390 156 $ 234 238 95 152U Income tax(40% of profit before tax) $ 91U Standard Costs on Which Budget Is Based Standard per Unit Variable costs s 4 Fixed factory overhead. 100000 $300000 Standard output 100000 units at V hour 50000 drect abour-hours Seling epenses Fxed, $100000 100000 units..... Fixed, s2000010000 uts. Standard costs were used for preparing bids, whereas the cost accounting system recorded actual costs Required: Redraft the budget to show the 2015 static budget, flexible budget, actual, and variances from the flexible budget, with contribution margins separately identified. 1. Note: See the standard cost details above. Prepare a quantitative analysis to demonstrate to management the main causes for the variance from the flexible budget, as a basis both for taking corrective action and for explaining the variance from the static budget to the bank manager. 2. 3. If expected 2016 operating results are similar to 2015, explain to the bank manager how much of the loan you would be able to repay from 2016 earnings. (Assume no changes in accounts receivable and accounts payable) 4. If competition became intense in 2016 and Argus was operating well below capacity at 85,000 units, explain with calculations the minimum bid you would make on an order for 10,000 units. What changes to the management accounting and reporting system for Argus Electronics would you propose? 5. Full variance analysis: variable costing Argus Electronics Limited manufactures and distributes transistors for electronics firms. In December 2014, Argus required a bank loan and the bank manager insisted that Tracy Miller, Argus's president, prepare a budget for 2015 In January 2016, Argus needed an additional loan and Miller asked her accountant to prepare a budget for 2016 to show the bank manager. Miller was concerned because Argus's profit for 2015 was considerably less than the 2015 budget figure given to the bank and she knew that the bank manager would want to know why. As a first step in analyzing the differences, Miller copied the 2015 actual figures onto the 2015 bank budget form shown below and prepared the standard cost details shown below the budget form: File Homensert Page Layout Formulas Dta Review View Calibri Wrap Text General E .0 .0 Conditional Format Cell Inser Formatting as Table Styles Merge & Center % , Format Painter Clipboard Alignment Number Actual Budget Sales Price Variance Flexible Budget 2 Sales- Units 3 Sales- Dollar 4 Cost of sales: Sales Quantity Variance Static Budget 1,10,000 $125,000$$2750000 1,05,000 $2520,000 0 1,05,000 $2625,000 5,000U $105,000uU Material Labour 4,21,000 8,45,000 2,05,000 3,03,000 17,74,000 7,46,000 23,15,000 1000U 5000U 5000F 3000U 4000U 109,000U 100,000F 4,20,000 8,40,000 2,10,000 3,00,000 17,70,000 8,55,000 24,15,000 20,000F 40000F 10000F 0 70,000F 55,000U 115,000F 4,40,000 8,80,000 2,20,000 3,00,000 18,40,000 9,10,000 25,30,000 Variable Overhead Fixed facory overhead 10 Gross Profit 11 Contribution Margin 12 Selling Expenses: Variable 2,09,000 1,02,000 1,97,000 5,08,000 2,38,000 95,000 2,10,000 1,00,000 2,00,000 5,10,000 107,000U (GP-SE) 345000 42B,000F (PBIT X40%) 138000 $64.2,000U (PBIT-IT) $207000 1,000F 2000U 13,000F 2,000F 10000F 0 0 10,000F 45,000U 18,0000F 27,000U 2,20,000 1,00,000 2,00,000 5,20,000 3,90,000 1,56,000 $234000 Fixed 15 Administraton-fixed 16 Total expenses 17 Profit before income tax 18 Income Tax (40% of profit before tax) 19 Net Income 20 $143000 ANCHORVALE ELECTRONICS LIMITED 2015 Budget Prepared for Bank Loan Dollars in (ooos) Variance 5000U $ 230U Static Budget Actual $ 2150 440 220 2520 Cost of sales. 19F 66F 164U 910 46 Seling expenses 209 102 197 11F 2U ied 100 390 156 $ 234 238 95 152U Income tax(40% of profit before tax) $ 91U Standard Costs on Which Budget Is Based Standard per Unit Variable costs s 4 Fixed factory overhead. 100000 $300000 Standard output 100000 units at V hour 50000 drect abour-hours Seling epenses Fxed, $100000 100000 units..... Fixed, s2000010000 uts. Standard costs were used for preparing bids, whereas the cost accounting system recorded actual costs Required: Redraft the budget to show the 2015 static budget, flexible budget, actual, and variances from the flexible budget, with contribution margins separately identified. 1. Note: See the standard cost details above. Prepare a quantitative analysis to demonstrate to management the main causes for the variance from the flexible budget, as a basis both for taking corrective action and for explaining the variance from the static budget to the bank manager. 2. 3. If expected 2016 operating results are similar to 2015, explain to the bank manager how much of the loan you would be able to repay from 2016 earnings. (Assume no changes in accounts receivable and accounts payable) 4. If competition became intense in 2016 and Argus was operating well below capacity at 85,000 units, explain with calculations the minimum bid you would make on an order for 10,000 units. What changes to the management accounting and reporting system for Argus Electronics would you propose? 5. Full variance analysis: variable costing Argus Electronics Limited manufactures and distributes transistors for electronics firms. In December 2014, Argus required a bank loan and the bank manager insisted that Tracy Miller, Argus's president, prepare a budget for 2015 In January 2016, Argus needed an additional loan and Miller asked her accountant to prepare a budget for 2016 to show the bank manager. Miller was concerned because Argus's profit for 2015 was considerably less than the 2015 budget figure given to the bank and she knew that the bank manager would want to know why. As a first step in analyzing the differences, Miller copied the 2015 actual figures onto the 2015 bank budget form shown below and prepared the standard cost details shown below the budget form
