Final Accounting

1546 Words May 12th, 2015 7 Pages
Peyton Approved Accounting Final

Final Part 1
SALES BUDGET
The sales budget is prepared by multiplying the expected unit sales volume for each product by its anticipated unit-selling price. As reflected in Exhibit A noted below and included in the overall Peyton Approved budget worksheet included in Appendix A, Peyton Approved expects sales volume to be 18000, 22000 and 20000 units in the month of July, August and September respectively. The budgeted sales in August exceeded July's sales units by 4000 units, however, sales declined in September by 2000 units from August. Peyten Approved budgeted sales price per units for the quarter was based on a sales price of $18 per unit. Thus, budgeted total dollars per month are
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Exhibit D – Selling Expense Budget

GENERAL AND ADMINISTRATIVE EXPENSE BUDGET
As previously mentioned, Peyton Approved does not combine its general and administrative expenses into one budget, the selling and administrative expense budget. This budget projects anticipated general and administrative expenses for the budget period, see Exhibit E. This budget is comprised of salaries and interest on long-term notes. The monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable, which computed into $2700 for the each month of July, August and September for the interest on the long-term note payable, which added to the $12,000 in administrative expense, totaled $14,700 for each month reflected.
Exhibit E – General and Administrative Expense Budgets

VARIANCE BUDGET
Flexible budget variance is used to do the variance analysis, it measures how well the business keeps units cost material and labor inputs within standards. The comparison noted in Exhibit F uses budget data on the original activity level. Variance analysis, direct material and direct labor, indicates that they are over budget and are unfavorable significantly. As per the data for direct material it is 13% over budget ($28055 / $212195), and for direct labor it is 10% over budget ($48000/$480000).
The non-favorable variance could have resulted due to poorly budgeted and/or poor supervision during the production process.
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