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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
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?

a.

To determine

State the information provided by the budget and questions that a bank manager would ask to the operations department manager.

Explanation

Static budget is a budget that is prepared for a particular level of sales or output and never changes even if the level changes.

The budget information provided by the bank manager of C Bank shows that the actual expenditures exceeded by $12,000 from the budgeted expenditures...

b.

To determine

State the information that the static budget fails to provide and whether the budget information could be presented differently to provide even more insight for the bank manager.

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