Quiz 9: Brun Swick Plastics
There would not be any change in the variance analysis schedule that has been proposed by person F. The suggestions can be implemented and it will not be too technical also. The starting point of the analysis in making the profit plan is separating the cost into variable and fixed categories. These costs are not controlled by the manager. The accountant can determine the manufacturing variable cost for any product by using the present prices and yields. The main reason for differentiating between the variable and fixed cost is the variable cost spending that requires no decision. It is on the basis of the volume. In the case of fixed cost the decision from the management is needed whether to decrease or increase the cost. The cost of advertising is the only element that does not fit the explanation of variable cost that has been mentioned in the first paragraph. Thus, the suggestions given can be implemented and there would not be any change required.
The analysis of variance schedule proposed by R is very general in nature. The proposed draft was not high in detail , and was highly aggregated that it had many flaws which could have mislead the management. The variance of sales volume in his report showed the effect changes in the sale s units on the sales expenses, operating income and contribution margins. On the basis of the sales quantity variance results, the management can see the effect of change in the units sold from the units budgeted to be sold. Also, two factors might be indicated that contribute to the variance of sales quantity, the variance of market share, and variance of market size. The variance of market size measures the changes effect in the full market of Boston creamery's operating income, and total margin of contribution.
The recommended corrective actions are: • The report just showed that there was unfavorable variance for producing 99,000U. This figure should be distributed because there was underlying facets from just this number. • Earlier, every morning, each route driver of sales delivery loads the truck from the inventory on the basis of today's order of sales, before leaving the plant. • In after situation, carton handling workers sort the daily production each day loading the truck before they could start their sales route. • There should be more analysis on the unfavorable variable cost. The variance of direct materials should be broken into the price variance and the usage variance.