Chapter 21, Problem 21.3CP

Static budget for a service company

A bank manager of City Savings bank Inc. uses the managerial accounting system to track the costs of operating the various departments within the bank. The departments include Cash Management, Trust, Commercial Loans, Mortgage Loans, Operations, Credit Card, and Branch Services. The static budget and actual results for the Operations Department are as follows:

Resources	Budget	Actual
Salaries	$200,000	$200,000
Benefits	30,000	30,000
Supplies	45,000	42,000
Travel	20,000	30,000
Training	25,000	35,000
Overtime	25,000	20,000
Total	$345.000	$357,000
Excess of actual over budget		$ 12,000

1. a. What information is provided by the budget? Specifically, what questions can the bank manager ask of the Operations Department manager?
2. b. What information does the static budget fail to provide? Specifically, could the budget information be presented differently to provide even more insight for the bank manager?