You are hired as a new cost accountant to Ciccetti Corporation. The company manager, David, is having a meeting with you in his office. He brought you this budgeted income statement that was completed by the previous cost accountant. David asks you to provide him with a report explaining the statement in clear, straightforward language, and how you plan to handle the annual budget.
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Flexible Budget Performance Part 2 |
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Flexible Budget |
Activity Variances |
Planning Budget |
|
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Customers served (q) |
36,000 |
33,000 |
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|
Revenue ($4.80q) |
$172,800 |
$14,400 F |
$158,400 |
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Expenses: |
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Wages and salaries ($36,900 + 1.60q) |
94,500 |
4,800 U |
89,700 |
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Supplies ($0.90q) |
32,400 |
2,700 U |
29,700 |
|
Insurance ($13,300) |
13,300 |
0 |
13,300 |
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Miscellaneous Expense ($6,300 + $0.40q) |
20,700 |
1,200 U |
19,500 |
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Total expense |
160,900 |
8,700 U |
152,200 |
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Net operating income |
$11,900 |
$5,700 F |
$6,200 |
Instructions
Write a 2–3 page report in which you:
- Explain the budgeted income statement.
- Outline how you would create annual budgeted financial statements.
- Analyze the difference between a static budget and a flexible budget, including the importance of each.
- Evaluate the importance of reading and correctly interpreting budgeted financial statements.
- Use three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment.
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