ACC 207 MDE Manufacturing Budget: Bird Feeder I. Sales and Manufacturing Expenses: Budget and Actual (2014) You will use this table to complete
Milestone 2 of the MDE manufacturing final project: part 2 tabs (budget model, variance analysis, flexible budget calculations, variance supporting calculations)as well as:
a) What are your fixed costs? Segregate them in the budget model.
b) Determine how variable costs change as activity measures change. How can this information be applied?
c) Create the budget model, ensuring fixed costs are hard coded into the model (variable costs are stated as a percentage of the relevant activity measures or as a cost per unit of activity measure).
d) Add actual activity measures to the model. Make sure all information is added accurately.
e) Add the flexible budget calculations to the budget model. Make sure all information is accurate.
f) Compare the flexible budget to the actual expenses. What does this inform? Be sure to discuss the following variances:
i. Static budget variance, including sales volume and flexible budget variances
ii. Price and efficiency variances for direct materials and direct labor
iii. Spending and efficiency variances for variable manufacturing overhead
g) Determine the aspects of the budgeting process that are in need of improvement. Justify your response.
h) Interpret what budget variances represent. Should all variances be investigated?