4. You have joined Unilever Bangladesh as an intern in the finance division. Your first project...

  

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4. You have joined Unilever Bangladesh as an intern in the finance division. Your first project as an intern will be to help the junior finance manager of Unilever Bangladesh, Mr. Reza Monem, to help in his flexible budget performance appraisal of the consumer products division for year ended December 31, 2021. The cost for the current year's planning budget appears below. Unilever Bangladesh planned to sell 5 different types of products and Mr. Monem estimated that total 60 machine hours will be required to produce those products. Unilever Bangladesh Costs from the Planning Budget For the Year Ended December 31 Budgeted number of productions Budgeted machine hours 60 Supervisory salaries Gasoline expenses Maintenance expenses Supplies Factory space rent Utilities expenses Machine Setup expenses Administrative expenses Tk. 144,000 27,000 10,800 43,000 45,000 10,500 13,000 43,200 Total Tk. 336,500 You have observed that some of the costs vary with the number of productions, some with the machine hours, and some are fixed and depend on neither the number of productions nor the machine hours. The costs of supplies, and machine setup vary only with the number of productions. On the other hand, supervisory salaries, gasoline, and maintenance expenses vary with the machine hours. Similarly, factory space rent and utilities expenses will vary with the machine hours. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions, and the remaining 10% depend on the machine hours. You are presented with the following actual results for the year from Mr. Monem: Unilever Bangladesh Actual Costs For the Year Ended December 31 Actual number of productions 4 Actual machine hours 64 Supervisory salaries Gasoline expenses Maintenance expenses Supplies Factory space rent Utilities expenses Machine Setup expenses Administrative expenses Tk. 148,000 28,600 12,300 39,300 49,600 10,950 12,000 41,650 Total Tk. 342,400 Answer the following questions: [8+2=10] a) Prepare a flexible budget performance report for the year that shows both activity variances and spending variances. [You must provide the supporting calculations to derive the cost formulas] b) If you were the CFO of the Unilever Bangladesh, would you be pleased with how well costs were controlled during the year? Why or why not? 4. You have joined Unilever Bangladesh as an intern in the finance division. Your first project as an intern will be to help the junior finance manager of Unilever Bangladesh, Mr. Reza Monem, to help in his flexible budget performance appraisal of the consumer products division for year ended December 31, 2021. The cost for the current year's planning budget appears below. Unilever Bangladesh planned to sell 5 different types of products and Mr. Monem estimated that total 60 machine hours will be required to produce those products. Unilever Bangladesh Costs from the Planning Budget For the Year Ended December 31 Budgeted number of productions Budgeted machine hours 60 Supervisory salaries Gasoline expenses Maintenance expenses Supplies Factory space rent Utilities expenses Machine Setup expenses Administrative expenses Tk. 144,000 27,000 10,800 43,000 45,000 10,500 13,000 43,200 Total Tk. 336,500 You have observed that some of the costs vary with the number of productions, some with the machine hours, and some are fixed and depend on neither the number of productions nor the machine hours. The costs of supplies, and machine setup vary only with the number of productions. On the other hand, supervisory salaries, gasoline, and maintenance expenses vary with the machine hours. Similarly, factory space rent and utilities expenses will vary with the machine hours. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions, and the remaining 10% depend on the machine hours. You are presented with the following actual results for the year from Mr. Monem: Unilever Bangladesh Actual Costs For the Year Ended December 31 Actual number of productions 4 Actual machine hours 64 Supervisory salaries Gasoline expenses Maintenance expenses Supplies Factory space rent Utilities expenses Machine Setup expenses Administrative expenses Tk. 148,000 28,600 12,300 39,300 49,600 10,950 12,000 41,650 Total Tk. 342,400 Answer the following questions: [8+2=10] a) Prepare a flexible budget performance report for the year that shows both activity variances and spending variances. [You must provide the supporting calculations to derive the cost formulas] b) If you were the CFO of the Unilever Bangladesh, would you be pleased with how well costs were controlled during the year? Why or why not?

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Requirement a Formula table Final table Explanation Actual variable administrative expenses has been ... View the full answer