racy needs some additional assistance. She has compared her budget to what actually happened this year. She sees there are differences but she is unsure why there are differences. She has included the amount she budgeted to include the standard costs and actual costs. She believes you can determine the differences and explain them so she can make any necessary changes. Her budget for materials was $37,750. She determined this by assuming she would pay $.09 ounce and would need 419,444 oz. of material. Her actual cost for materials was $.10 per ounce and she used 422,444 oz. She would like to know the total variance and how much was because she spent a different amount per ounce and how much was due to using a different amount of material. She budgeted $59,000 for labor. She budgeted based on paying the bakers $11.63 per hour and taking 5,075 hours. Her actual wages were $58,000. She actually paid $11.55 per hour and her bakers worked 5,025 hours. She would like for you to determine the total variance and how much was due to what she paid per hour and how much was due the time it took to bake the cupcakes. Your assignment is to write her a professional memo explaining to her the material quantity variance, material price variance, labor efficiency variance, and labor rate variance. Let her know which variances are favorable and unfavorable. Explain what each is and how it is calculated in layman’s terms.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Tracy needs some additional assistance. She has compared her budget to what actually happened this year. She sees there are differences but she is unsure why there are differences. She has included the amount she budgeted to include the
Her budget for materials was $37,750. She determined this by assuming she would pay $.09 ounce and would need 419,444 oz. of material. Her actual cost for materials was $.10 per ounce and she used 422,444 oz. She would like to know the total variance and how much was because she spent a different amount per ounce and how much was due to using a different amount of material.
She budgeted $59,000 for labor. She budgeted based on paying the bakers $11.63 per hour and taking 5,075 hours. Her actual wages were $58,000. She actually paid $11.55 per hour and her bakers worked 5,025 hours. She would like for you to determine the total variance and how much was due to what she paid per hour and how much was due the time it took to bake the cupcakes.
Your assignment is to write her a professional memo explaining to her the material quantity variance, material price variance, labor efficiency variance, and labor rate variance. Let her know which variances are favorable and unfavorable. Explain what each is and how it is calculated in layman’s terms.
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