Budget Performance Reports for Cost Centers Partially completed budget performan

Question

Budget Performance Reports for Cost Centers

Partially completed budget performance reports for Garland Company, a manufacturer of light duty motors, follow:

a. Complete the budget performance reports by determining the correct amounts for the lettered spaces (a-l) as marked above.

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 .

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)

Explanation / Answer

a.

Calculations:

Thus the answer is:

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.

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

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