Assessment of Performance variances
Read the “Widget Company Performance Report” document, provided with this Assessment. Imagine that you are the manager of the production department at the Widget Company and you have been asked to explain the variances found in a performance report, propose possible causes, and make suggestions for how the variances can be remedied. Using the information provided in the Widget Company Performance Report, prepare a memo to your boss that explains the possible causes of the variances in the performance report, and suggest how the company can remedy them. (200-300 words)
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Widget Company Manufacturing Overhead Performance Report For Month Ended June 20XX |
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Static Budget at 6,000 units |
Actual |
Variance (Actual—Static Budget) |
Flexible Budget at 6,500 units |
Variance (Actual—Flexible Budget) |
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Revenue |
$ 60,000 |
$ 63,240 |
$ 3,240 |
F |
$ 65,000 |
$ (1,760) |
U |
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Less: |
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Variable costs |
27,000 |
31,200 |
4,200 |
U |
29,250 |
1,950 |
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Contribution Margin |
$ 33,000 |
$ 32,040 |
$ (960) |
$ 35,750 |
$ (3,710) |
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Fixed costs |
24,000 |
25,000 |
1,000 |
1,000 | ||||||
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Profit |
$ 9,000 |
$ 7,040 |
$ (1,960) |
$ 11,750 |
$ (4,710) |
U |
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