Gbt1 Task 3 Summary
Summary Report Competition Bikes, Inc.
1. Discuss specific budgetary items that raise concern in the budget planning (Spreadsheet Tab: Task 2_Budgets_and_Proformas).
In this discussion, I want to focus on some concerns in the budget planning for Competition Bike’s Inc. (CBI) for year nine. A budget for a company “…represents a detailed analysis of how a company expects to spend money in future time periods.” (Vitez, 2014)
Sales: The first budget item I want to focus on are sales forecasted for year nine which are $5,247,450. Let’s review sales from prior years. Sales for years six were $4,485,000, an increase by 33.3 percent to $5,980,000 in year seven. Between years seven and eight, sales dropped 15 percent to $5,083,000. …show more content…
Reaction to unfavorable price variance and efficiency variance for manufacturing overhead: Unfortunately the price and efficiency variance were both unfavorable for CBI.
Corrective action for activity variance for manufacturing between the planning budget and the actual budget: CBI’s management needs to calculate the manufacturing overhead per bike and monitor manufacturing overhead on a monthly basis.
Corrective action for manufacturing overhead in the revenue and spending variance: CBI’s management had to incur higher labor cost and this is now reflected in the revenue and spending variance for manufacturing overhead. CBI’s management needs to examine its manufacturing overhead and find the cause for an unfavorable outcome between the actual budget and the flexible budget.
Corrective action for manufacturing overhead in the price variance: Again CBI’s management has to deal with fluctuation when it comes to the price variances in the manufacturing overhead. Manufacturing overhead should be continuously monitored on a monthly …show more content…
Nevertheless CBI’s management had to spend $171,000 in administrative salaries. A possible cause could be higher admin costs during times when sales were unusually higher and required CBI’s management to authorize overtime.
Reaction in revenue and spending variance: Higher spending on administrative salaries created an unfavorable outcome.
Corrective action for administrative salaries: CBI’s management should implement the same system for admins that I suggested for their manufacturing personnel. Give time off during slow times in exchange for longer hours during peak times.
Fixed General and Admin Expenses: CBI management had budgeted $170,000 per years in both their flexible budget and their planning budget. CBI spent $2000 more on other general and administrative admin experience. A possible cause could have been overtime during peak times.
Reaction in revenue and spending variance: Unfortunately CBI”s management spend $2000 more in the actual budget and created an unfavorable outcome.
Corrective action: CBI’s management needs to monitor these expenses on a monthly basis to ensure that the budget amount in not higher than originally budgeted
1. Discuss specific budgetary items that raise concern in the budget planning (Spreadsheet Tab: Task 2_Budgets_and_Proformas).
In this discussion, I want to focus on some concerns in the budget planning for Competition Bike’s Inc. (CBI) for year nine. A budget for a company “…represents a detailed analysis of how a company expects to spend money in future time periods.” (Vitez, 2014)
Sales: The first budget item I want to focus on are sales forecasted for year nine which are $5,247,450. Let’s review sales from prior years. Sales for years six were $4,485,000, an increase by 33.3 percent to $5,980,000 in year seven. Between years seven and eight, sales dropped 15 percent to $5,083,000. …show more content…
Reaction to unfavorable price variance and efficiency variance for manufacturing overhead: Unfortunately the price and efficiency variance were both unfavorable for CBI.
Corrective action for activity variance for manufacturing between the planning budget and the actual budget: CBI’s management needs to calculate the manufacturing overhead per bike and monitor manufacturing overhead on a monthly basis.
Corrective action for manufacturing overhead in the revenue and spending variance: CBI’s management had to incur higher labor cost and this is now reflected in the revenue and spending variance for manufacturing overhead. CBI’s management needs to examine its manufacturing overhead and find the cause for an unfavorable outcome between the actual budget and the flexible budget.
Corrective action for manufacturing overhead in the price variance: Again CBI’s management has to deal with fluctuation when it comes to the price variances in the manufacturing overhead. Manufacturing overhead should be continuously monitored on a monthly …show more content…
Nevertheless CBI’s management had to spend $171,000 in administrative salaries. A possible cause could be higher admin costs during times when sales were unusually higher and required CBI’s management to authorize overtime.
Reaction in revenue and spending variance: Higher spending on administrative salaries created an unfavorable outcome.
Corrective action for administrative salaries: CBI’s management should implement the same system for admins that I suggested for their manufacturing personnel. Give time off during slow times in exchange for longer hours during peak times.
Fixed General and Admin Expenses: CBI management had budgeted $170,000 per years in both their flexible budget and their planning budget. CBI spent $2000 more on other general and administrative admin experience. A possible cause could have been overtime during peak times.
Reaction in revenue and spending variance: Unfortunately CBI”s management spend $2000 more in the actual budget and created an unfavorable outcome.
Corrective action: CBI’s management needs to monitor these expenses on a monthly basis to ensure that the budget amount in not higher than originally budgeted