Budget Variance

Budget Variance

Please use budget variance spreadsheet that is provided for part 1.

1. Budget Variance Analysis

The actual quantity of material used was 31,000 with an actual cost of $7.75 per unit. The actual labor hours were 33,000 with an actual rate per hour of $15.

a) Develop a variance analysis including a budget variance performance report and appropriate variances for materials, labor, and overhead.

b) Annotate each variance. What does the variance tell you?

c) What needs to be investigated to determine the reason for the variance? Why?

2. Write a 2-3 pages budget report. Your report should be 2–3 pages, double-spaced, with one-inch margins, 12-point Times New Roman font, and APA format with at least 2-3 references.

Prepare a Report

a) Discuss the initial budget process, the variances, and potential reasons for the variances.

b) Determine changes you think the company should make based on the variance analysis. What will the changes accomplish?

c) What are the ethical considerations of the changes you have selected? Why are you recommending these particular changes?

d) Decide whether you continue buying a particular component of one of your products or making the product in-house. Develop a recommendation on the “make” or “buy” decision for the given component. What factors did you consider?

e) What are the ethical considerations of your decision? What implications could this decision have?

f) Describe how your decision was reached. How will this impact the efficiencies of your operation?

g) What suggestions would you make for nonfinancial performance measures that the company should adopt? What are the pros and cons of each?

h) What are the ethical considerations of your suggestions? Explain the significance of each.

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