Question

Valotic Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows:

1

Customer service salaries

$546,840.00

2

Insurance and property taxes

114,660.00

3

Distribution salaries

872,340.00

4

Marketing salaries

1,028,370.00

5

Engineer salaries

836,850.00

6

Warehouse wages

586,110.00

7

Equipment depreciation

183,792.00

8

Total

$4,168,962.00

During January, the costs incurred in the Consumer Products Division were as follows:

1

Customer service salaries

$602,350.00

2

Insurance and property taxes

110,240.00

3

Distribution salaries

861,200.00

4

Marketing salaries

1,085,230.00

5

Engineer salaries

820,008.00

6

Warehouse wages

562,632.00

7

Equipment depreciation

183,610.00

8

Total

$4,225,270.00

Required:

1. Prepare a budget performance report for the director of the Consumer Products Division for the month of January. Enter all amounts as positive numbers.
2. For which costs might the director be expected to request supplemental reports?

Answer 1

1

Valotic Tech Inc.
Budget Performance Report
For the month ended January 31, 2017
	Budget	Actual	Over Budget	Under Budget	Variance %
	Amount $	Amount $	Amount $	Amount $
Customer Service Salaries	546,840	602,350	55,510		10.15%
Insurance and Property Taxes	114,660	110,240		4,420	3.85%
Distribution Salaries	872,340	861,200		11,140	1.28%
Marketing Salaries	1,028,370	1,085,230	56,860		5.53%
Engineer Salaries	836,850	820,008		16,842	2.01%
Warehouse Wages	586,110	562,632		23,478	4.01%
Equipment Depreciation	183,792	183,610		182	0.10%
Total	4,168,962	4,225,270	112,370	56,062

2

For which costs might the director be expected to request supplemental reports?

For following three cost might the director be expected to request supplemental reports

(1)The customer service and

(2)marketing

(3) ware House wages

Explanation:

These cost are significantly over budget. The director should investigate the cause of these results. One possibility is that the company is having an increase in sales, requiring greater marketing effort and customer service.

Working note for the answer: