Question

1. Budget Performance Reports for A decentralized unit in which the department or division manager has responsibility for the control of costs incurred and the authority to make decisions that affect these costs.Cost Centers

   Partially completed budget performance reports for Garland Company, a manufacturer of light duty motors, follow:

   Garland Company Budget Performance Report—Vice President, Production For the Month Ended November 30
   Plant	Budget		Actual		Over Budget		Under Budget
   Eastern Region	$422,700		$422,700				$0
   Central Region	304,300		301,300				(3,000)
   Western Region	(g)		(h)		(i)
   	$(j)		$(k)		$(l)		$(3,000)

   Garland Company Budget Performance Report—Manager, Western Region Plant For the Month Ended November 30
   Department	Budget		Actual		Over Budget		Under Budget
   Chip Fabrication	$(a)		$(b)		$(c)
   Electronic Assembly	78,140		79,160		1,020
   Final Assembly	125,020		124,020				$(1,000)
   	$(d)		$(e)		$(f)		$(1,000)

   Garland Company Budget Performance Report—Supervisor, Chip Fabrication For the Month Ended November 30
   Cost	Budget		Actual		Over Budget		Under Budget
   Factory wages	$29,520		$31,590		$2,070
   Materials	69,260		68,780				$(480)
   Power and light	4,070		4,840		770
   Maintenance	6,450		7,060		610
   	$109,300		$112,270		$3,450		$(480)

   a. Complete the budget performance reports by determining the correct amounts for the lettered spaces (a-l) as marked above.

   a. $	g. $
   b. $	h. $
   c. $	i. $
   d. $	j. $
   e. $	k. $
   f. $	l. $

   b. Complete the following memo to Cassandra Reid, vice president of production for Garland Company, explaining the performance of the production division for November.

   MEMO
   To: Cassandra Reid, Vice President of Production

   The Western Region

   • Eastern Region
   • Central Region
   • Western Region
   plant has experienced a budget overrun. Its budget reveals that the Chip Fabrication
   • Chip Fabrication
   • Electronic Assembly
   • Final Assembly
   Department caused the majority of the budget overrun. The supervisor of the Chip Fabrication
   • Chip Fabrication
   • Electronic Assembly
   • Final Assembly
   Department should investigate the reasons for the budget overruns in factory wages, power and light, and maintenance
   • factory wages, materials, and maintenance
   • materials, power and light, and maintenance
   • factory wages, power and light, and maintenance
   .

   Feedback

   a. Solve for (a) & (b) from the totals for the Chip Fabrication Report.

   Solve for (c) and the remaining amounts. Amounts (d) and (g) will be the same; amounts (e) and (h) will be the same; and amounts (i) and (l) will be the same.

   b. Review what is happening within the regions and how they are performing within their budgets. Discuss possible causes for the budget overruns.

   Learning Objective 2.

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Answer 1

a) For calculation refer table below

Answer	Comment
a. $ 109,300	Same as Total Budget for Supervisor, Chip fabrication
b. $ 112,270	Same as Total Actual for Supervisor, Chip fabrication
c. $ 2970	(b - a)
d. $ 312,460	Total Budget for Manager, Western Region plant (109,300+78140+125,020)
e. $ 315,450	Total Actual for Manager, Western Region plant (112,270+79160+124,020)
f. $ 3990	Total overbudget for Manager, Western Region plant (2970+1020)
g. $ 312,460	Same as Total Budget for Manager, Western region plant
h. $ 315,450	Same as Total Actual for Manager, Western region plant
i. $ 2990	(h -g)
j. $ 1,039,460	Total Budget for VP, Production (422,700+304,300+312,460)
k. $ 1,039,450	Total Actual for VP, Production (422,700+301,300+315,450)
k. $ 2990	Total Over Budget for VP, Production (422,700+301,300+315,450)

Garland Company
Budget Performance Report—Vice President, Production
For the Month Ended November 30
Plant	Budget	Actual	Over Budget	Under Budget
Eastern Region	$422,700	$422,700		$0
Central Region	3,04,300	3,01,300		-3,000
Western Region	(g) $312,460	(h) $315,450	(i) $2990
	$(j) 1,039,460	$(k) 1,039,450	$(l) 2990	$(3,000)
Garland Company
Budget Performance Report—Manager, Western Region Plant
For the Month Ended November 30
Department	Budget	Actual	Over Budget	Under Budget
Chip Fabrication	$(a) $109,300	$(b) $112,270	$(c) 2970
Electronic Assembly	78,140	79,160	1,020
Final Assembly	1,25,020	1,24,020		$(1,000)
	$(d) 312,460	$(e) 315,450	$(f) 3990	$(1,000)
Garland Company
Budget Performance Report—Supervisor, Chip Fabrication
For the Month Ended November 30
Cost	Budget	Actual	Over Budget	Under Budget
Factory wages	$29,520	$31,590	$2,070
Materials	69,260	68,780		$(480)
Power and light	4,070	4,840	770
Maintenance	6,450	7,060	610
	$109,300	$112,270	$3,450	$(480)

b) The western region plan has experience a budget over run, while eastern region plant is at budget and central region plants have budget surplus.For western region, chip fabrication department has caused most of budget overrun. Budget of Chip fabrication shows that this happened due to cost exceeding for Factory wages, power light and maintenance. The supervisor of chip fabrication should have investigation into wages, power,light and maintenance to find causes