Question

C) $22.950 EX 9-1 Budget performance reports for cost centers Obj. 2 Partially completed budget performance reports for Garland Company, a man duty motors, follow: e reports for Garland Company, a manufacturer of light SHOW ME HOW Plant Eastern Region Central Region Western Region Garland Company Budget Performance Report-Vice President, Production For the Month Ended November 30 Budget Actual Over Budget $2,300,000 $2,287,900 3,000,000 2,988.400 (H) Under Budget $ (12,100) (11,600) (G) 0) $ (23,700 Under Budget Garland Company Budget Performance Report Manager, Western Region Plant For the Month Ended November 30 Department Budget Actual Over Budget Chip Fabrication $ (A) $ (B) $ (C) Electronic Assembly 700,000 703,200 3,200 Final Assembly 525,000 516,600 (D) $ (E) $ (F) $(8,400) $(8,400) Garland Company Budget Performance Report-Supervisor, Chip Fabrication For the Month Ended November 30 Cost Budget Actual Over Budget Under Budget Factory wages $ 82,000 $ 95,500 $13,500 Materials 120,000 115,300 $(4,700) Power and light 45,000 49,950 4,950 Maintenance 28,000 37,200 9,200 $275,000 $297,950 $27,650 $(4,700) A. Complete the budget performance reports by determining the correct amounts for the lettered spaces. B. Compose a memo to Cassandra Reid, vice president of production for Garland Company, explaining the performance of the production division for November

Answer 1

Solution – Question No.A

Garland Company
Budget Performance Report-Vice President Production
For the month ended November 30
Cost	Budget	Actual	Over Budget	Under Budget
Eastern Region	$        23,00,000	$        22,87,900		$         (12,100)
Central Region	$        30,00,000	$        29,88,400		$         (11,600)
Western Region	$        15,00,000	$       15,17,750	$             30,850	$         (13,100)
	$        68,00,000	$        67,94,050	$             30,850	$         (36,800)
Garland Company
Budget Performance Report-Supervisor-Manager, Western Region Plant
For the month ended November 30
Cost	Budget	Actual	Over Budget	Under Budget
Chip fabrication	$          2,75,000	$          2,97,950	$             27,650	$           (4,700)
Electronic Assembly	$          7,00,000	$          7,03,200	$                3,200
Final Assembly	$          5,25,000	$          5,16,600		$           (8,400)
	$        15,00,000	$        15,17,750	$             30,850	$         (13,100)
Garland Company
Budget Performance Report-Supervisor, Chip Fabrication
For the month ended November 30
Cost	Budget	Actual	Over Budget	Under Budget
Factory wages	$              82,000	$              95,500	$             13,500
Materials	$          1,20,000	$          1,15,300		$           (4,700)
Power and light	$              45,000	$              49,950	$                4,950
Maintenance	$              28,000	$              37,200	$                9,200
	$          2,75,000	$          2,97,950	$             27,650	$           (4,700)

Solution – Question No.B

MEMORANDAM

To, Vice President Production

Subject – Budget Performance Report

Please find the review points of Production Budget Performance Report for the month ended November 30th.

While reviewing the variances between budget and actual, the following observations are being noted :-

• Easter region and Central region have controlled their respective region’s production cost efficiently and managed actual under budgets. The under budget variance is less than 1%.
• The production cost incurred in Western region has overshot the budget by more than 2%. The factory wages, the power wages and maintenance costs incurred during the month of November has overshot the budget.

The budget for the Western region was not efficiently framed. The factory wages, the electricity and the maintenance cost which are in the control of western region’s production unit are not budgeted reasonably.

Overall, the production cost is in control for the month of November. But, the budgeting exercise needs to be rebuild for all regions based on the Zero Based Budgeting so that the under budget and over budget variances are minimized.