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Submit your quantitative analysis with a memo to management. Prepare a Memo to Management a) Summarize your quantitative analysis based on your findings (include answers
Submit your quantitative analysis with a memo to management.
Prepare a Memo to Management
a) Summarize your quantitative analysis based on your findings (include answers to all questions in Sections I, II, and III).
b) Report the parts of the budgeting process that are in need of improvement. Provide suggestions to improve those parts.
c) Report overall improvement recommendations to management. Consider the ethical implications when communicating sensitive information.
| Budgeted Unit | Actual Volume | Flexible Budget | ||
| Amounts | Amount | |||
| Revenues | $21.00 | 47,000 | $987,000 | |
| Variable Costs | ||||
| DM-Plastic | 0.75 | 47,000 | 32,250 | |
| DM-Cedar | 4.50 | 47,000 | 211,500 | |
| Direct Manuf. Labor | 6.00 | 47,000 | 282,000 | |
| Variable Manuf. Overhead | 0.06 | 47,000 | 2,820 | |
| Total Variable Manufacturing Costs | 11.31 | 47000 | 531,570 | |
| Fixed Manufacturing Overhead | 95,000 | |||
| Total Manufacturing Costs | 626,570 | |||
| Gross Margin | $360,430 |
| Price Variance | Efficiency Variance | |||||
| Direct Materials - Cedar | -22560 | -14100 | ||||
| Direct Materials - Plastic | 1034 | -3525 | ||||
| Direct Labor | 5640 | -56400 | ||||
| Spending Variance | Efficiency Variance | |||||
| Variable Manufacturing Overhead | -235 | 470 | ||||
| Budget Model | From Flexible Budget Calculations Sheet | |||||||
| Actual | Flexible Budget Variance | Favorable/ Unfavorable | Flexible Budget | Sales Volume Variance | Favorable/ Unfavorable | Static Budget | ||
| Units Sold | 47,000 | 47,000 | 50,000 | |||||
| Revenues | $991,700 | $4,700 | Favorable | $987,000 | ($63,000) | Unfavorable | $1,050,000 | |
| Variable Costs | ||||||||
| DM-Plastic | $ 37,741 | $ (2,491) | Unfavorable | $ 32,250 | $ 2,250 | Favorable | $ 37,500 | |
| DM-Cedar | $ 248,160 | $ (36,660) | Unfavorable | $ 211,500 | $ 13,500 | Favorable | $ 225,000 | |
| Direct Manuf. Labor | $ 332,760 | $ (50,760) | Unfavorable | $ 282,000 | $ 18,000 | Favorable | $ 300,000 | |
| Variable Manuf. Overhead | $ 2,585 | $ 235 | Favorable | $ 2,820 | $ 180 | Favorable | $ 3,000 | |
| Total Variable Costs | $ 621,246 | $ (89,676) | Unfavorable | $ 531,570 | $ 33,930 | Favorable | $ 565,500 | |
| Fixed Manuf. Overhead | $ 94,500 | $ 500 | Favorable | $ 95,000 | $ - | Favorable | $ 95,000 | |
| Total Costs | $ 715,746 | $ (89,176) | Unfavorable | $ 626,570 | $ 33,930 | Favorable | $ 660,500 | |
| Gross Margin | $ 275,954 | $ (84,476) | Unfavorable | $ 360,430 | $ (29,070) | Unfavorable | $ 389,500 |
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