Prepare and Perform

1. a)What are yourfixed costs? Segregate them in the budget model.
2. b)Determine howvariable costschange as activity measures change. How can this information be applied?
3. c)Create thebudget model, ensuring fixed costs are hard coded into the model (variable costs are stated as a percentage of the relevant activity
4. measures or as a cost per unit of activity measure).
5. d)Addactual activitymeasures to the model. Make sure all information is added accurately.
6. e)Add theflexible budget calculationsto the budget model. Make sure all information is accurate.
7. f)Comparetheflexible budgetto the actual expenses. What does this inform? Be sure to discuss the following variances:
8. Static budget variance, including sales volume and flexible budget variances
9. Price and efficiency variances for direct materials and direct labor
10. Spending and efficiency variances for variable manufacturing overhead
11. g)Determine the aspects of thebudgeting processthat are in need of improvement. Justify your response.
12. h)Interpret whatbudget variancesrepresent. Should all variances be investigated?