8 9 Techno Industries is a Canada wide company, which manufactures and sells rock climbing equipment....

  
 
 

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8 9 Techno Industries is a Canada wide company, which manufactures and sells rock climbing equipment. The President reviewed the 2021 Annual Edmonton Region Budget Report and promptly called a Managers' meeting to discuss the 2021 results. He was happy with the net favourable variance of $2,000 in the Edmonton Region, but reprimanded the Regional Manager for the over-expenditure in total costs, as he expected them to do much better in controlling their costs as compared to budget. The Regional Manager, Emma Jamison, has requested further analysis of the results as she believes the Region did a good job controlling costs in 2021 and the problem was that she has been "charged" with costs that are not directly under her control. The Corporate Accountant says everything is fine as the overall variance is $2,000 favourable. Here is the report: Techno Industries Edmonton Region Budget Report For the Year Ending December 31, 2021 Activity level (units) Sales Less: Costs Variable manufacturing costs Fixed manufacturing costs Variable selling & admin Fixed selling & admin Total costs Budget 5,000 65,000 25,000 16,000 10,000 7,500 58,500 Actual 5,200 68,120 24,960 20,000 10,660 8,000 63,620 Variance 3,120 F 40 F 4,000 U 660 U 500 U 5,120 U G H What type of budget did Techno Industries' accountant prepare and what is one major issue in using this type of budget? (2 marks) What type of budget did the accountant use in the Edmonton Region Budget Report (above)and provide to the President of Techno? What is a disadvantages of using this type of budgeting? ANWSER b. Prepare a flexible budget responsibility report for Techno's Edmonton Region using the results as reported in the accountant's original report above. Incorporate all adjustments to budget or actual numbers required to ensure this is a flexible budget as compared to the original report above (10 marks). Additional information: 1. For fixed manufacturing costs, 75% of actual costs are controlled by the Regional Manager and 100% of the budget is controllable. 2. Variable manufacturing costs are budgeted at $5.00 per unit and actually cost $4.80 per unit. 3. Variable selling and administrative costs are budgeted at $2.00 per unit and actually cost $2.05 per unit. 4. The budgeted selling price per unit is $13.00 and the actual selling price per unit was $13.10. 5. For fixed selling and administrative costs, 100% are controllable for both actuals and the budget. K I Activity level (units) Techno Industries Edmonton Region Responsibility Report For the Year Ending December 31, 2021 Budget Actual Variance actuals and the budget. U/F % 2 C Provide comments comparing the Accountant's original Budget Report versus the report you prepared in part b. Assume the Corporate tolerance for variance is +/- 5% from budget. 345 Do you agree with the Accountant's statement that there are no major issues with the results in the original report? OR Do you agree with the Regional Manager who believes there are issues with the results original report? (1 Marks) c1 I agree with: (the Accountant or the Regional Manger) ANWSER 8 9 Od What items (variances) do you think need further investigation and why (2 Mark)? c2 Why do you agree with the individual you chose for your answer above (part 1)? What did you base your answer on (2 Marks)? e Based on your response to part d what is a fair measure to use in evaluating Emma Jamison's performance, specifically for this type of responsibility centre (2 Marks)? 8 9 Techno Industries is a Canada wide company, which manufactures and sells rock climbing equipment. The President reviewed the 2021 Annual Edmonton Region Budget Report and promptly called a Managers' meeting to discuss the 2021 results. He was happy with the net favourable variance of $2,000 in the Edmonton Region, but reprimanded the Regional Manager for the over-expenditure in total costs, as he expected them to do much better in controlling their costs as compared to budget. The Regional Manager, Emma Jamison, has requested further analysis of the results as she believes the Region did a good job controlling costs in 2021 and the problem was that she has been "charged" with costs that are not directly under her control. The Corporate Accountant says everything is fine as the overall variance is $2,000 favourable. Here is the report: Techno Industries Edmonton Region Budget Report For the Year Ending December 31, 2021 Activity level (units) Sales Less: Costs Variable manufacturing costs Fixed manufacturing costs Variable selling & admin Fixed selling & admin Total costs Budget 5,000 65,000 25,000 16,000 10,000 7,500 58,500 Actual 5,200 68,120 24,960 20,000 10,660 8,000 63,620 Variance 3,120 F 40 F 4,000 U 660 U 500 U 5,120 U G H What type of budget did Techno Industries' accountant prepare and what is one major issue in using this type of budget? (2 marks) What type of budget did the accountant use in the Edmonton Region Budget Report (above)and provide to the President of Techno? What is a disadvantages of using this type of budgeting? ANWSER b. Prepare a flexible budget responsibility report for Techno's Edmonton Region using the results as reported in the accountant's original report above. Incorporate all adjustments to budget or actual numbers required to ensure this is a flexible budget as compared to the original report above (10 marks). Additional information: 1. For fixed manufacturing costs, 75% of actual costs are controlled by the Regional Manager and 100% of the budget is controllable. 2. Variable manufacturing costs are budgeted at $5.00 per unit and actually cost $4.80 per unit. 3. Variable selling and administrative costs are budgeted at $2.00 per unit and actually cost $2.05 per unit. 4. The budgeted selling price per unit is $13.00 and the actual selling price per unit was $13.10. 5. For fixed selling and administrative costs, 100% are controllable for both actuals and the budget. K I Activity level (units) Techno Industries Edmonton Region Responsibility Report For the Year Ending December 31, 2021 Budget Actual Variance actuals and the budget. U/F % 2 C Provide comments comparing the Accountant's original Budget Report versus the report you prepared in part b. Assume the Corporate tolerance for variance is +/- 5% from budget. 345 Do you agree with the Accountant's statement that there are no major issues with the results in the original report? OR Do you agree with the Regional Manager who believes there are issues with the results original report? (1 Marks) c1 I agree with: (the Accountant or the Regional Manger) ANWSER 8 9 Od What items (variances) do you think need further investigation and why (2 Mark)? c2 Why do you agree with the individual you chose for your answer above (part 1)? What did you base your answer on (2 Marks)? e Based on your response to part d what is a fair measure to use in evaluating Emma Jamison's performance, specifically for this type of responsibility centre (2 Marks)?

Answer rating: 100% (QA)

a1 The accountant prepared an activity based budget One major issue with this type of budget is that it is difficult to predict the total costs of activities in advance as the costs may vary depending ... View the full answer