Course Title: Managerial Accounting and Legal Aspects of Business
Competency Assessment Title: Flexible Budget
Assignment Directions
Review the scenario and complete the activity below. This scenario can also be found in the “Problems – Series A” section 8-19A of Ch. 8, “Performance Evaluation,” of Fundamental Managerial Accounting Concepts.
Use Excel®—showing all work and formulas—to complete the following:
• Prepare a flexible budget.
• Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget.
• Compute flexible budget variances by comparing the flexible budget with the actual results.
Mr. Snow was extremely upset with the budget deficit. He immediately called you, the treasurer, to complain about the budget variance for the meal cost. He told you that the added dessert caused the meal cost to be $4,810 ($25,110 – $20,300) over budget. He added, “I could expect a couple hundred dollars one way or the other, but several thousand is totally unacceptable. At the next budget meeting of the budget committee, I want you to explain what happened.”
Create a 6- to 8-slide presentation for the budget committee meeting showing your findings and recommendations from your computations.
Complete the following in your presentation:
• Summarize the results of the sales volume and variable cost volume variances computations based on the comparison between the master budget and the flexible budget.
• Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results.
• Justify the favorable or unfavorable budget variances.
• Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget.
• Make recommendations for what can be done differently to stay on budget for future luncheons. Provide specific examples to support your recommendations.
• Include detailed speaker notes.
Competency Assessment Rubric
1. Flexible Budget (weight 15%) Created a flexible budget in Excel, showing all work and formulas, and all calculations are correct.
2. Sales Volume and Cost Volume Variances (weight 15%) In Excel, all components of the computations of the sales volume and variable cost volume variances based on a comparison between the master budget and the flexible budget were correct.
3. Flexible Budget Variance (weight 15%) In Excel, computation of flexible budget variances based on comparison between the flexible budget with the actual results was completely correct.
4. Results: Sales Volume and Variable Cost Volume Variances (weight 10%) Thoroughly summarized the results of the sales volume and variable cost volume variances computations based on a comparison between the master budget and flexible budget from a creative and innovative perspective.
5. Results: Flexible Budget Variances (weight 10%) Thoroughly summarized the results of the flexible budget variances computations based on a comparison between the flexible budget and actual results from a creative and innovative perspective.
6. Justified Budget Variances (weight 10%) Thoroughly justified the favorable or unfavorable budget variances from a creative and innovative perspective.
7. Meeting the Budget (weight 10%) Thoroughly discussed why someone should be concerned with a not-for-profit organization meeting the budget from a creative and innovative perspective.
8. Recommendations (weight 15%) Provided thorough, creative, and innovative recommendations for staying on and supported all recommendations with examples.