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 $368,100 $368,100 $0 Central Region 265,000 262,400 (2,600) Western Region (g) (h) (i) $(j) $(k) $(l) $(2,600) 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 73,000 73,950 950 Final Assembly 116,070 115,140 $(930) $(d) $(e) $(f) $(930) Garland Company Budget Performance Report—Supervisor, Chip Fabrication For the Month Ended November 30 Cost Budget Actual Over Budget Under Budget Factory wages $30,480 $32,610 $2,130 Materials 66,570 66,100 $(470) Power and light 3,590 4,270 680 Maintenance 8,010 8,770 760 $108,650 $111,750 $3,570 $(470) 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 (Eastern, Central or Western) plant has experienced a budget overrun. Its budget reveals that the (Chip Fabrication, Electronic Assembly, or Final Assembly) Department caused the majority of the budget overrun. The supervisor of the (Chip Fabrication, Electronic Assembly, or Final Assembly) Department should investigate the reasons for the budget overruns in (factory wages, materials and maintenance) (materials, power and light, and maintance) or (factory wages, power and light, and maintenance.)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 | $368,100 | $368,100 | $0 | |||||
| Central Region | 265,000 | 262,400 | (2,600) | |||||
| Western Region | (g) | (h) | (i) | |||||
| $(j) | $(k) | $(l) | $(2,600) |
| 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 | 73,000 | 73,950 | 950 | |||||
| Final Assembly | 116,070 | 115,140 | $(930) | |||||
| $(d) | $(e) | $(f) | $(930) |
| Garland Company Budget Performance Report—Supervisor, Chip Fabrication For the Month Ended November 30 |
||||||||
| Cost | Budget | Actual | Over Budget | Under Budget | ||||
| Factory wages | $30,480 | $32,610 | $2,130 | |||||
| Materials | 66,570 | 66,100 | $(470) | |||||
| Power and light | 3,590 | 4,270 | 680 | |||||
| Maintenance | 8,010 | 8,770 | 760 | |||||
| $108,650 | $111,750 | $3,570 | $(470) |
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 (Eastern, Central or Western) plant has experienced a budget overrun. Its budget reveals that the (Chip Fabrication, Electronic Assembly, or Final Assembly) Department caused the majority of the budget overrun. The supervisor of the (Chip Fabrication, Electronic Assembly, or Final Assembly) Department should investigate the reasons for the budget overruns in (factory wages, materials and maintenance) (materials, power and light, and maintance) or (factory wages, power and light, and maintenance.)
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