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In: Accounting

Budget Performance Reports for Cost Centers Partially completed budget performance reports for Garland Company, a manufacturer...

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
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
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
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 .

Solutions

Expert Solution

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.


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