Bank Management Printers Inc. produces luxury chequebooks with three cheques and stubs per page. Each chequebook is designed for an individual customer and is ordered through the customer’s bank. The company’s operating budget for September 2013 included these data:
The executive vice-president of the company observed that the operating income for September was much less than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results.
Bank Management develops its flexible-budget-based budgeted revenue per output unit and variable costs per output unit without a detailed analysis of budgeted inputs.
1. Prepare a Level 1 analysis of the September performance.
2. Prepare a Level 2 analysis of the September performance.
3. Why might Bank Management find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer.

  • CreatedJuly 31, 2015
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