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According to estimations, actual expense per unit is $4.8 higher than the budgeted one. The exact same is likewise obvious from the provided data based on display 1. Analysis: Although, the actual production, in terms of number of products, registered a 22.22% decline from the budgeted production, the total expense (both variable and non variable expenses) registered only a 12.05% decrease. Alternatively, it can be stated that the plant running at 87.95% of its overall budgeted cost, produced just 77.78% of its allocated capability in terms of number of products, resulting in the increase of real cost per unit by a quantity of S4.
8.
Talk about the performance report and the plant accountant's analysis of results. How, if at all, would you suggest the performance report be changed prior to sending it on to the division manager and Marco Corporation headquarters?
The efficiency report prepared by the accounting professional is not helpful in analyzing the variances as it is not an Apple to Apple comparison, however more like an Apple to Orange contrast.
It is since the budgeted expenses are for 18,000 systems where as the real costs are for 14,000 units. To make the previous (Apple to Apple) comparison, we need to prepare a Versatile spending plan which is based on real output at allocated amount and budgeted cost. Revised performance report as per Exhibit 1 is to be sent to the department manager and Marco corporation head office.
Prepare your own analysis of the Waltham Division's operations in Might. Describe in as much information as possible why income varied from what you would have expected.
Regrettably, due to unavailability of sufficient information, we can't calculate the cost and performance variances (which we call Level 3 differences) and for this reason not able to have a deeper insight into company's performance between real and predicted performance. Based upon the provided data, analysis for variable and non variable costs in addition to contribution margin is as under.
The total variable cost and the direct labor cost in particular, is the biggest culprit in company’s negative performance as compared to what was expected. The flexible budget variance for total variable cost is Unfavorable (US$ 33,156 as per Exhibit 1 below) for the actual output of 14,000 units. It is unfavorable because of one or both of the following.
The flexible budget variance for the contribution margin is $19,156 Unfavorable (table 1), It helps reduce the impact of variance under the variable costs The main reason being the stronger than expected market demand resulting in a 2.08% price hike.
Company’s performance is much better in this section as the variance is limited to $1200 only. Further insight suggests that the said variance is limited to higher supervision costs only whereas costs under all other heads remain as expected.
Waltham Motors Case. (2016, Jun 06). Retrieved from https://studymoose.com/waltham-motors-case-essay
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