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 a. What information is provided by the budget? Specifically, what questions can the bank manager ask of the Operations Department manager? 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?

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter 21, Problem 21.3CP
Textbook Problem

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?

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Chapter 21 Solutions

Financial & Managerial Accounting
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