In: Accounting
Budget Performance Reports for 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 |
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Plant | Budget | Actual | Over Budget | Under Budget | ||||
Eastern Region | $349,500 | $349,500 | $0 | |||||
Central Region | 251,600 | 249,100 | (2,500) | |||||
Western Region | (g) | (h) | (i) | |||||
$(j) | $(k) | $(l) | $(2,500) |
Garland Company Budget Performance Report—Manager, Western Region Plant For the Month Ended November 30 |
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Department | Budget | Actual | Over Budget | Under Budget | ||||
Chip Fabrication | $(a) | $(b) | $(c) | |||||
Electronic Assembly | 77,500 | 78,510 | 1,010 | |||||
Final Assembly | 124,000 | 123,010 | $(990) | |||||
$(d) | $(e) | $(f) | $(990) |
Garland Company Budget Performance Report—Supervisor, Chip Fabrication For the Month Ended November 30 |
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Cost | Budget | Actual | Over Budget | Under Budget | ||||
Factory wages | $20,510 | $21,950 | $1,440 | |||||
Materials | 64,060 | 63,610 | $(450) | |||||
Power and light | 4,330 | 5,150 | 820 | |||||
Maintenance | 6,170 | 6,760 | 590 | |||||
$95,070 | $97,470 | $2,850 | $(450) |
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 plant has experienced a budget overrun. Its budget reveals that the Chip Fabrication Department caused the majority of the budget overrun. The supervisor of the Chip Fabrication Department should investigate the reasons for the budget overruns in factory wages, power and light, and maintenance .
a.
Calculations:
Western Region Plant | ||||
Department | Actual | Budget | Overbudget | Underbudget |
Chip Fabrication (total Cost of Chip) | 97,470 | 95,070 | 2,400 | |
Electronic Assembly | 78,510 | 77,500 | 1,010 | |
Final Assembly | 123,010 | 124,000 | -990 | |
Total | 298,990 | 296,570 | 3,410 | -990 |
Production | ||||
Plant | Actual | Budget | Overbudget | Underbudget |
Eastern | 349,500 | 349,500 | ||
Central | 249,100 | 251,600 | -2,500 | |
Western (From Above Table) | 298,990 | 296,570 | 2,420 | |
Total | 897,590 | 897,670 | 2,420 | -2,500 |
Thus the answer is:
a | 95,070 | g | 296,570 |
b | 97,470 | h | 298,990 |
c | 2,400 | i | 2,420 |
d | 296,570 | j | 897,670 |
e | 298,990 | k | 897,590 |
f | 3,410 | l | 2,420 |
b:
To: Cassandra Reid, Vice President of Production
The Western Region plant has experienced a budget overrun. Its budget reveals that the Chip Fabrication Department caused the majority of the budget overrun. The supervisor of the Chip Fabrication Department should investigate the reasons for the budget overruns in factory wages, power and light, and maintenance.
Of the total budget overrun of $3,410 the chip department accounted for $2,400 of the amount. The balance overrun amount of $1,010 could be attributed to the Electronic Assembly department of the Western region plant.
The reason for budget overruns could be technical or economic. In terms of technical reasons the causes might be use of imperfect techniques in cost prediction. In terms of economic reasons the causes could be imposition of new taxes and tariffs.