Effectiveness/efficiency; ethics; writing Top management of Capital Services observed that the budget for the EDP department had been growing far beyond what was anticipated for the past several years. Each year, the EDP manager would demonstrate that increased usage by the company’s non-EDP departments would justify a larger appropriation. The administrative vice president commented that she was not surprised because user departments were not charged for the EDP department services, and EDP department personnel were creative and eager to continue expanding services. A review of the current year's statistics of the EDP department revealed the following: Budgetary appropriation $1,600,000 based on 3,200 hours of run time. $1,280,000 of this appropriation is related to fixed costs. Actual department expenses Variable: $296,400 (incurred for 3,120 hours of run time). Fixed: $1,304,000. a. Did the EDP manager stay within his appropriation? Appropriation $ Actual cost Under(Above) Budget $ b. What was the EDP department's degree of effectiveness? Note: Round your answer to two decimal places. Answer c. Was the EDP department efficient? Treat variable and fixed expenses separately. Note: Round your answers to the nearest whole dollar. Actual efficiency of variable expenses $ per hour Planned efficiency of variable expenses $ per hour Actual efficiency of fixed expenses $ per hour Planned efficiency of fixed expenses $ per hour d. Using the formulas for analyzing variable and fixed costs, calculate the variances incurred by the EDP department. Note: Do not use negative signs with your answers. Variable spending variance $ Variable efficiency variance $ Variable total variance $ Fixed spending variance $ Fixed volume variance $ Fixed total variance $
Effectiveness/efficiency; ethics; writing
Top management of Capital Services observed that the budget for the EDP department had been growing far beyond what was anticipated for the past several years. Each year, the EDP manager would demonstrate that increased usage by the company’s non-EDP departments would justify a larger appropriation. The administrative vice president commented that she was not surprised because user departments were not charged for the EDP department services, and EDP department personnel were creative and eager to continue expanding services. A review of the current year's statistics of the EDP department revealed the following:
Budgetary appropriation
$1,600,000 based on 3,200 hours of run time.
$1,280,000 of this appropriation is related to fixed costs.
Actual department expenses
Variable: $296,400 (incurred for 3,120 hours of run time).
Fixed: $1,304,000.
a. Did the EDP manager stay within his appropriation?
| Appropriation | $
|
| Actual cost | |
| Under(Above) Budget | $ |
b. What was the EDP department's degree of effectiveness?
Note: Round your answer to two decimal places.
Answer
c. Was the EDP department efficient? Treat variable and fixed expenses separately.
Note: Round your answers to the nearest whole dollar.
Actual efficiency of variable expenses $ per hour
Planned efficiency of variable expenses $ per hour
Actual efficiency of fixed expenses $ per hour
Planned efficiency of fixed expenses $ per hour
d. Using the formulas for analyzing variable and fixed costs, calculate the variances incurred by the EDP department.
Note: Do not use negative signs with your answers.
Variable spending variance $
Variable efficiency variance $
Variable total variance $
Fixed spending variance $
Fixed volume variance $
Fixed total variance $
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