Peyton Approved Summary

Use of the flexible budget shows the budgeted operating income given the actual sales. When you compare the flexible budget to the actual budget you are able to compare the total sales and cost incurred given the same units sold. The sales price variance, which is the actual sales less the flexible budgeted sales, was $14,700 favorable. This means that actual sales were higher than budgeted sales at that usage. This is attributable to the increase in service price from $25 to $26.40. Price variance for material usage was $2,100 over the flexible budget projection. This could be attributed to overuse or waste of materials. As expected, the direct labor price variance was $3,375 lower than the flexible budget amount. This is attributed to the manager’s effective use of labor. Operating expenses were also higher than the flexible budget

* The $5,600 unfavorable direct materials efficiency variance and the $16,400 unfavorable direct manufacturing labor efficiency variance could be because of unskilled workers, poor production schedule, or poor machine maintenance.

Since a company’s’ budget is typically based on knowledge from their financial history therefore, if a budget variance occurs, it can be because inaccurate estimates were done, or one or more factors have changed unexpectedly, and the company need to make some type of adjustments to their budget. Once a company discovered a significant budget variance, they will need to identify the cause, and address it accordingly. For example,

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

Does sports performance depend as much on mental strength and agility as physical power ?After reading “What Could Be Better Than a Touchdown” by Kelefa Sanneh and Why We Run by Bernd Heinrich, I say- mental strength and agility are just as important as physical power in sports. It may be true that physical power is more than mental power in sports. However physical power and mental strength are equally important.

Working on the budget for Peyton Approved is the budget variance was also prepared on the company behalf. By using this variance this gives the difference between actual cost and the budgeted amount. With that in mind if the variance increases the operating cost, is then labeled as favorable. On the other hand, if the variances decrease

Fantastic, Inc. is a case study which allows you to incorporate numerous financial and managerial accounting concepts into a single business setting. You will take the position of the company controller who will prepare the budget for the year ended December 31, 2006, using the actual data from 2001 through 2005 and information given to you by various departments. You will prepare a report for the president of the company describing the strengths and weakness of the corporation as well as to provide suggestions for the future. In short, you will be responsible for the planning and control procedures for the company from an accounting standpoint.

Founded in a kitchen at home, Peyton Approved comes from humble roots with only your pet’s needs in mind. Although an up-and-comer to the dog food industry, Peyton Approved has begun looking at ways to grow and diversify. The demand is increasing and in order to keep all markets satisfied, Peyton Approved wants to look a different variety of treats. The purpose of this memo is to request a loan so that the company can expand and continue growing. The accounting system used by Peyton Approved will be detailed in order to show the effectiveness when managing their finances. Furthermore, the memo will address any strengths and weaknesses and what opportunities may be available in order to continue growing.

Financial Analysis Task 5 Part B-Report to CEO B1. Custom Snowboards sales history has been steadily increasing per the table below. CSI has had small growth in sales with an equal increase in COGS. The COGS is relative to the increase in the net sales, however, CSI should look further into ways they can decrease their COGS line item in order to see more profit growth from year to year. We can see on the Horizontal Analysis below that net sales, COGS and Profit all had the same increases from years 12 to 13 and from years 13 to 14. This is indicative of CSI needing to do more cost based analysis to see where they can make production cost cuts and boost sales. Per the data, operating costs also increased alongside the net sales. Items such

First, the materials efficiency variance was noted as unfavorable because 1,000 more units were used than budgeted. Since materials efficiency variances result from a variety of causes, including materials quality, spoilage, training, and equipment (Benge, n.d.). The next area to investigate are the labor variances which showed the cost, while favorable, was a difference of $1.00 per hour. Further, the efficiency was unfavorable, indicating that production required an additional 3,000 hours over budget, which could be the result of staff training, faulty equipment, or low-quality materials (Direct labor efficiency variance - explanation, formula, example, reasons. 2016). Since there appears to be a lower cost of labor than anticipated, but higher materials and hourly utilization rate, it is possible that new lower cost staff were hired resulting in slower production rates and elevated materials utilization. As such, the production manager should be consulted to investigate the cause of these variances and to put proper corrective actions into place (Miller-Nobles et al.,

The operating budget and variance analysis for a company like Peyton Advance are important tools for financial stability. A company will use these tools as a basis for deciding what will be appropriate actions to take for each quarter and to help forecast the future. Both tools are used for communication of corporate goals, warning signs of potential problems, coordination between departments and products, and evaluation of performance of employees. The operating budget and variance analysis for Peyton Approved shows the areas that are working for the company and the areas that need improvement.

These factors will help Peyton decide and analize the effecintcy of their production in many areas by analyzing these reports. How can they effective and efficiently run the day to day operations and still be within budget and be profitable? The operating budget is a key factor in answering this question. The formulas used to assist in this process for cost variances are as follows:

Budgets serve five main purposes; planning, facilitating communication and coordination, allocating resources, controlling profits and operations and evaluating performance and providing incentives. The budgeting process requires both technical and interpersonal leadership skills to achieve each of these purposes effectively. The director’s memo demonstrates several short comings in the budgeting process. The director instituted the “responsibility accounting system” as a means of evaluating performance. However, the DPW director has not consulted Sam in the budget process. Sam understands that his total expenditures are impacted by relatively unpredictable events that contribute to an uncontrollable element of his cost. The

They ended up paying the workers a lot more than they anticipated. They may have had to work longer hours in order to complete the bird houses, whether it was because they were working too slowly, or they tasks were to hard to complete in the given time. They could have also made poor-quality bird houses that needed to be rebuilt, which would have made them throw the old one out. Along with this, the efficiency variance was also unfavorable. This proves that the workers are not completing their work in an efficient manner. In order to improve this part of the budgeting process, the managers should talk with the employees about needing to speed up the process of making the bird houses so they are done on time. The managers may need to rework the setup of the manufacturing center so that the steps to completing the bird house are one after another. This would help the workers to work more efficiently, causing the direct labor variance to

Budget formulation and use are tools that guide many decision making strategies in business. The measures that are least effective could create an avalanche of catastrophic events that can negatively impact the decision making strategies. It is in the best interest of the pertinent parties to draft an operating budget based on a collective set of information relating to organizational vision and mission. Ineffective measures can be catastrophic based on the foundation for measures used in creating the budget. Among the many issues organizations face that relates to creating an effective operating budget results from poor