Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 14, Problem 14.1E

Budget performance reports for cost centers

Partially completed budget performance reports for Runquist Company, a manufacturer of air conditioners, are provided below.

Chapter 14, Problem 14.1E, Budget performance reports for cost centers Partially completed budget performance reports for , example  1

Chapter 14, Problem 14.1E, Budget performance reports for cost centers Partially completed budget performance reports for , example  2
a.Complete the budget performance reports by determining the correct amounts for the lettered spaces.
b.Compose a memo to Jeff Kitchens, president of Meridian Company, explaining the performance of the Production Division for June.

Expert Solution
Check Mark
To determine

(a)

Concept Introduction:

Financial budget generally made by the company's accounting and finance department. A performance report is a specific document of the company's overall budget management system. This list contains specific attributes relating to many variances of the budget with other information which are needed to the budget situation.

Management can plan for future expenditures through budget statement and also may adjust future expenditures based on past budget performance. Sometimes, past performance budget helps the management to understand how and why they are spending money in their business for expansion of business and increasing the profit.

To find out:

A missing amount in budget statement of Company R for the month ended April 30.

Answer to Problem 14.1E

  1. Budget for condenser assembly: $275,000
  2. Actual for condenser assembly: $297,950
  3. Balance of over-budget (b-a): $22,950
  4. Total budget of oxford plant: $1,500,000
  5. Total actual balance of oxford plant: $1,517,750
  6. Total over budget for oxford plant: $26,150
  7. Total balance of budget of oxford: $1,500,000
  8. Total actual balance of oxford plant: $1,517,750
  9. Total over budget for oxford plant: $17,750
  10. Total balance of budget of company: $6,800,000
  11. Total balance of actual expenditure of company: $6,794,050
  12. Total over budget for Company: $17,750

Explanation of Solution

Firstly, we will be taking the figure of Supervisor, condenser assembly's budget performance report for filling the missing amount in the Oxford plant. And after that, using the figure of the Oxford plant in the overall budget statement for complete the statement.

RUNQUIST COMPANY

Budget performance Report − Plant Manager, Oxford Plant

For the month ended April, 30

    DepartmentBudget
      ($)
    Actual
      ($)
    Over Budget
      ($)
    Under-Budget
      ($)
    Condenser Assembly  275,000  297,950  22,950-
    Electronic Assembly  700,000  703,200  3,200-
    Final Assembly  525,000  516,600-  (8,400)
    TOTAL  1,500,000  1,517,750  26,150  (8,400)

RUNQUIST COMPANY

Budget performance Report − Plant Manager, Oxford Plant

For the month ended April, 30

    PlantBudget
      ($)
    Actual
      ($)
    Over Budget
      ($)
    Under-Budget
      ($)
    Daytona  2,300,000  2,287,900-  (12,100)
    Little Rock  3,000,000  2,988,400-  (11,600)
    Oxford  1,500,000  1,517,750  17,750-
    TOTAL  6,800,000  6,794,050  17,750  (23,700)
Expert Solution
Check Mark
To determine

(b)

Concept Introduction:

Financial budget generally made by the company's accounting and finance department. A performance report is a specific document of the company's overall budget management system. This list contains specific attributes relating to many variances of the budget with other information which are needed to the budget situation.

Management can plan for future expenditures through budget statement and also may adjust future expenditures based on past budget performance. Sometimes, past performance budget helps the management to understand how and why they are spending money in their business for expansion of business and increasing the profit.

To prepare:

A memo to Jeff Kitchens, President of Meridian Company for performance of the production division for June.

Answer to Problem 14.1E

The memo has been prepared for the performance of the production division to the resident of production house.

Explanation of Solution

To Mr. Jeff, president of production house

The actual cost of plant Oxford is higher from the budget amount, while it is lesser in other plants namely Daytona and Little Rock.

For such difference, reason can be analyzed from the budget statement of Oxford in which it is figured out that such is to be due to higher factory wages, higher maintenance charges, etc. in the Condenser assembly department. So, there is a need for some alertness.

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Chapter 14 Solutions

Survey of Accounting (Accounting I)

Ch. 14 - What is the major shortcoming of using operating...Ch. 14 - Prob. 7CDQCh. 14 - In a decentralized company in which the divisions...Ch. 14 - Prob. 9CDQCh. 14 - Prob. 10CDQCh. 14 - Prob. 11CDQCh. 14 - Prob. 12CDQCh. 14 - Why would standard cost be a more appropriate...Ch. 14 - Prob. 14CDQCh. 14 - Budget performance reports for cost centers...Ch. 14 - Divisional income statements The following data...Ch. 14 - Prob. 14.3ECh. 14 - Prob. 14.4ECh. 14 - Service department charges In divisional income...Ch. 14 - Service department charges and activity bases...Ch. 14 - Divisional income statements with service...Ch. 14 - Corrections to service department charges Panda...Ch. 14 - Profit center responsibility reporting On-Demand...Ch. 14 - Prob. 14.10ECh. 14 - Prob. 14.11ECh. 14 - Prob. 14.12ECh. 14 - Profit margin, investment turnover, and return on...Ch. 14 - Prob. 14.14ECh. 14 - Determining missing items in return on investment...Ch. 14 - Prob. 14.16ECh. 14 - Prob. 14.17ECh. 14 - Prob. 14.18ECh. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Prob. 14.3.1PCh. 14 - Divisional income statements and return on...Ch. 14 - Prob. 14.3.3PCh. 14 - Prob. 14.4.1PCh. 14 - Prob. 14.4.2PCh. 14 - Prob. 14.4.3PCh. 14 - Effect of proposals on divisional performance A...Ch. 14 - Prob. 14.4.5PCh. 14 - Prob. 14.5.1PCh. 14 - Prob. 14.5.2PCh. 14 - Prob. 14.5.3PCh. 14 - Prob. 14.5.4PCh. 14 - Prob. 14.6.1PCh. 14 - Prob. 14.6.2PCh. 14 - Prob. 14.6.3PCh. 14 - Prob. 14.6.4PCh. 14 - Prob. 14.6.5PCh. 14 - Balanced scorecard American Express Company (AXP)...Ch. 14 - Balanced scorecard Several years ago. United...Ch. 14 - Balanced scorecard Delta Air Lines, Inc. (DAL)...Ch. 14 - Balanced scorecard Costco Wholesale Corporation...Ch. 14 - Prob. 14.5MBACh. 14 - Prob. 14.1CCh. 14 - Prob. 14.2CCh. 14 - Prob. 14.3.1CCh. 14 - Prob. 14.3.2CCh. 14 - Prob. 14.3.3CCh. 14 - Prob. 14.3.4CCh. 14 - Prob. 14.4.1CCh. 14 - Prob. 14.4.2CCh. 14 - Prob. 14.4.3CCh. 14 - Prob. 14.4.4CCh. 14 - Prob. 14.5.1CCh. 14 - Prob. 14.5.2CCh. 14 - Prob. 14.5.3CCh. 14 - Prob. 14.5.4CCh. 14 - Prob. 14.5.5CCh. 14 - Prob. 14.5.6C
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