Question

In: Accounting

You are a hotshot MBA financial analyst for the manager of the Emmons Corporation’s Machining Department....

You are a hotshot MBA financial analyst for the manager of the Emmons Corporation’s Machining Department. Your manager is visibly upset after being reprimanded for his department’s poor performance over the last month, as presented in the below report:

Emmons Corporation – Machining Department

Department Performance Report

For the Month of November 2016

Actual Results

Original Planning Budget

Variances

Volume-Machine Hours

38,000

35,000

Direct Labor Wages

$86,100

$80,500

$5,600 U

Supplies

$23,100

$21,000

$2,100 U

Maintenance

$137,300

$134,000

$3,300 U

Utilities

$15,700

$15,200

$500 U

Supervision

$38,000

$38,000

-----

Depreciation

$80,000

$80,000

-----

Total

$380,200

$368,700

$11,500 U

“I just can’t understand all these unfavorable variances,” your manager complained to you. “When the big boss called me in, I thought she was going to give me a pat on the back for the great job that we had done in November. Instead, she handed me a copy of this report, read me the riot act, and pointed out to me that every variance was unfavorable! I need your help in countering the conclusions of this report.”

Your manager gives you the above report and you go back to your office to study and prepare the response for your manager. You know that direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs, and maintenance and utilities are mixed costs. The fixed component of the original budget maintenance cost is $92,000. The fixed component of the original budget utilities cost is $11,700.

Required:

  1. You recall studying flexible budgets in your amazing MBA program. Using a flexible budget approach, prepare the more appropriate performance report for your manager.
  2. Based on your report in “a” above, how would you evaluate your department’s performance?

Solutions

Expert Solution

Answer :


Related Solutions

Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 72,700 $ 71,200 $ 1,500 U Supplies 21,800 20,400 1,400 U Maintenance 22,200 20,100 2,100 U Utilities 19,900 18,900 1,000 U Supervision 42,000 42,000...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 76,600 $ 74,800 $ 1,800 U Supplies 23,300 21,600 1,700 U Maintenance 23,100 20,900 2,200 U Utilities 20,800 19,500 1,300 U Supervision 45,000 45,000...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 96,100 $ 92,800 $ 3,300 U Supplies 30,800 27,600 3,200 U Maintenance 26,500 23,700 2,800 U Utilities 24,200 22,500 1,700 U Supervision 60,000 60,000...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 90,900 $ 88,000 $ 2,900 U Supplies 28,800 26,000 2,800 U Maintenance 25,300 22,900 2,400 U Utilities 23,000 21,700 1,300 U Supervision 56,000 56,000...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 79,200 $ 77,200 $ 2,000 U Supplies 24,300 22,400 1,900 U Maintenance 23,700 21,300 2,400 U Utilities 21,400 19,900 1,500 U Supervision 47,000 47,000...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for...
Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly upset after being reprimanded for his department’s poor performance over the prior month. The department’s cost control report is given below: Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30 Actual Results Planning Budget Variances Machine-hours 42,000 40,000 Direct labor wages $ 76,600 $ 74,800 $ 1,800 U Supplies 23,300 21,600 1,700 U Maintenance 23,100 20,900 2,200 U Utilities 20,800 19,500 1,300 U Supervision 45,000 45,000...
Assume that you are a financial analyst in the fixed income department of an investment bank....
Assume that you are a financial analyst in the fixed income department of an investment bank. You are given the following information: the 6-month, 12-month, 18-month, 24-month, and 30-month zero rates are, respectively, 4%, 4.2%, 4.4%, 4.6%, and 4.8% per annum, with continuous compounding. Your task is to answer the following questions. Estimate the cash price of a bond with a face value of 100 that will mature in 30 months and pays a coupon of 4% per annum semiannually....
Assume that you are a financial analyst in the fixed income department of an investment bank....
Assume that you are a financial analyst in the fixed income department of an investment bank. You are given the following information: the 6-month, 12-month, 18-month, 24-month, and 30-month zero rates are, respectively, 4%, 4.2%, 4.4%, 4.6%, and 4.8% per annum, with continuous compounding. Your task is to answer the following questions. Estimate the cash price of a bond with a face value of 100 that will mature in 30 months and pays a coupon of 4% per annum semiannually....
You have been appointed as financial manager for MBA. The company manufactures one product and uses...
You have been appointed as financial manager for MBA. The company manufactures one product and uses standard costing system. Standard cost per unit Material 5kg at R12 50 per unit Labour 2 hours at R35 per hour Factory overheads R45 per labour hour. Actual data for the month: Number of units manufactured 12500 Material used R811 250                                                         Issue price of material R13 75 per kg Calculate and explain the difference between the total actual and the total standard cost. Suggest...
Assume you are a new manager in the Financial Analysis department and are orienting a team...
Assume you are a new manager in the Financial Analysis department and are orienting a team of new college graduates to the world of capital budgeting. In your initial post, explain the uses of the common capital budgeting tools to them. Explain what they are, and how you use them in your daily tasks. Make sure to explain any financial terminology
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT