please check the attached files, the memo should be no more than a page and a half and one page is ideal, but but with the appendices it should take more pages. basically it should look and be as...

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please check the attached files, the memo should be no more than a page and a half and one page is ideal, but but with the appendices it should take more pages. basically it should look and be as organized as the example memos, thank you.


Scenario 'ChickPea Delight' operates fast food restaurants in the food courts of shopping malls. Its main product is a serving of falafel that requires ground chick peas (direct material) and food preparation (direct labor). The April budget for ChickPea Delight's Parkside restaurant was: · Sales 24,000 servings at $4.25 each · Standard food cost of $0.50 per serving (1/4 pound @ $2.00 per pound) · Standard direct labor of $0.60 per serving (1/25th hour @ $15.00 per hour) · Fixed occupancy expenses (rent and equipment) of $7,500 Actual April performance of the Parkside restaurant was: · Sales 26,000 servings at $4.50 each · Food cost of $14,820 for 7,800 pounds · Direct labor cost of $19,240 for 1,300 hours · Fixed occupancy expenses of $7,200 In early May, the manager received the following financial performance report: ChickPea Delight - Parkside Performance Report - Month of April Category Actual Budgeted Variance Revenues $117,000 $102,000 $15,000 F Food Cost (14,820) (12,000) 2,820 U Labor Cost (19,240) (14,400) 4,840 U Occupancy (7,200) (7,500) 300 F Profit $75,740 $68,100 $7,640 F The above performance report is misleading! Hint: ‘flex’ the budget to the actual output and compare this information to the actual figures given to develop the direct material and direct labor variances. See Module 23 in our textbook for a description of flexing the budget. Required You will, as an individual, write a memo with appendices. Requirements for constructing your memo and appendices are outlined below. Memo and Appendices The memo should address the following issues about budgeting process: · Explain why 'flexible budget variances' are usually better indicators of performance than 'static budget variances.'  · For the month of April, what conclusions can you draw from the materials (price and efficiency) and labor variances (labor rate and efficiency)? (Remember to reference the appendices as support for your conclusions.) · Must give recommendations of action items to address or explore. Improvements?  The appendices should provide a reference source for the memo. The following items must be included. · Develop and show in one table (use Exhibit 23.1 as an example) the 'performance report for the month of April.'  Include your static budget and flexible budget figures for all categories in this table. · Analyze the direct materials usage and show price and quantity variances. · Analyze the direct labor usage and show labor rate and labor efficiencies variances. · Terminology as usual. Example memo 1 The A group of Timber’s Department Store Financing Department has prepared the second quarter's budget. Budgeting is necessary because it helps the entity create financial stability, as it's a crucial step in managing current and future expenses. We start with the sales budget because sales are the first inflow of cash which the company sees, and according to this all the costs and expenses are linked, therefore at first, the sales budget is created which is then used to estimate the costs and expenses that can be incurred by the firm. Budgetary slack is the cushion that managers often add to their budget to act as a buffer and to insinuate increased performance by intentionally lowering projected sales or increasing budgetary expenses. This is something that we suspect to occur because no estimate is full proof, especially when many people are involved in budgeting. However we can make over or underestimates based on the market circumstances and the historical data from past sales. We normally see this feature used in unethical situations, such as significant bonuses or other financial gain for the manager. For example, employees would overestimate budgeted costs because they can obtain favorable performance reviews when the real expense is lower than budgeted expense. As a result, the budgetary slack would increase unnecessary budgets and disrupt companies to efficiently assess their performance. The budgetary slack occurs more in a participative budget approach rather than an imposed budget approach because it encourages more employees to participate, allowing more room for employees to reflect their own interest on the budget. Slack can be minimized in an organization by limiting the amount of managers to a small, dedicated group of managers who will look at the budget creation, instead of many managers involved.  We have calculated the second quarter's budget, and were able to predict a net income of $15,500 (before taxes) by June 30, 2022. By using historical data we were able to determine the purchases budget for each month, allowing us to have a total of $134,000 to be divided appropriately over the 3 months. (Appendix A). Then using our sales revenue for each month, we completed a cash receipt that represents the cash received in a cash sale during the second quarter. This yielded a total of $199,000. (Appendix B). The budget of Timbers Department Store is good as the company can generate cash frequently through the sales it makes, and also for the quarter ending June 30, 2022, the company is profitable with a net income of $15,500, which reflects good performance. The best part of the budget of the company is that it can collect 50% of the cash of the sales it makes in any given month which gives the flexibility to the company to pay out its suppliers. Though in the first two months of the quarter (April and May) the company could not generate enough sales to reach the minimum cash level which the company requires and therefore the company had to borrow $22,000 in April, and $3,000 in May to reach the minimum cash level set by the company. (Appendix D, E) The adequacy of the Cash Management Policy for the company is good but going forward the company will have to look to generate more cash sales due to the amount borrowed, in order to reach the minimum cash level, plus the interest burden comes on the company which takes away the profit of the company. For future quarters, the company will have to improve the trade policy, which means that they will have to collect more sales in any given month in cash. Additionally, they should decrease the cash level necessary to pay off the loan taken because this builds onto the burden of the company even when cash flow is generated, which is more than the minimum cash level. Therefore, the company should be allowed to pay off the loan as soon as the minimum cash level is crossed in any month. Keeping the focus on the idea that all budgeting starts from predicted sales, it is crucial that those are accurate by preventing huge budgetary slack.  Appendix A. TIMBERS DEPARTMENT STORE Purchase Budget for 2nd Quarter of 2022   April May June Total Budgeted Sales $60,000 $70,000 $90,000 $220,000 COGS $30,000 $35,000 $45,000 $110,000 Desired Ending Inventory $42,000 $54,000 $60,000 $60,000 Total  $72,000 $89,000 $105,000 $170,000 Less: Beginning Inventory $36,000 $42,000 $54,000 $36,000 Required Purchase $36,000 $47,000 $51,000 $134,000     Appendix B. TIMBERS DEPARTMENT STORE Cash Receipts Schedule for 2nd Quarter of 2022 Sales Revenue Cash Collection Pattern April May June Total (2nd Quarter) January $70,000     February $60,000 $6,000   $6,000  March $50,000 $20,000 $5,000   $25,000  April $60,000 $30,000 $24,000 $6,000 $60,000  May $70,000 $35,000 $28,000 $63,000  June $90,000 $45,000 $45,000  Total Cash Receipts  $56,000 $64,000 $79,000 $199,000     Appendix C. TIMBERS DEPARTMENT STORE Cash Disbursements Schedule for 2nd Quarter of 2022   April May June Total Inventory Purchase $31,000 $36,000 $47,000 $114,000 Wages and Salaries $27,000 $27,000 $27,000 $81,000 Utilities $1,500 $1,500 $1,500 $4,500 Rent $3,000 $3,000 $3,000 $9,000 Cash Dividend $15,000 $0 $0 $15,000 Total Disbursement $77,500 $67,500 $78,500 $223,500     Appendix D. TIMBERS DEPARTMENT STORE Overall Cash Budget for 2nd Quarter of 2022   April May June Total Cash Balance, Beginning $4,000 $4,500 $4,000 $4,000 Add: Collection from Sales $56,000 $64,000 $79,000 $199,000 Less: Total Disbursement $77,500 $67,500 $78,500 $223,500 Ending Cash before borrowing/repayments -$17,500 $1,000 $4,500 -$20,500       New Loans $22,000 $3,000 $0 $25,000 Repayments $0 $0 $0 $0 Interest accrued -$220 -$250 -$250 -$720 Interest Paid $0 $0 $0 $0 Net Cash from financing $22,000 $3,000 $0 $25,000 Cash Balance, Ending $4,500 $4,000 $4,500 $4,500 Appendix E. TIMBERS DEPARTMENT STORE  Budgeted Income Statement  for the quarter ending June 30, 2022 Particulars  Amount Sales $220,000 Cost of Goods Sold (COGS) $110,000 Gross Profit $110,000 Expenses   Wages and Salaries $81,000 Utilities $4,500 Rent $9,000 Total Expense $94,500 Income From Operations $15,500 Less: Interest Expense $0 Net Income from Operations $15,500                         Appendix F. TIMBERS DEPARTMENT STORE  Budgeted Balance Sheet June 30, 2022 Assets  Amount Liabilities and Stockholders’ Equity Amount Cash $4,500 Account Payable $51,000 Accounts receivable $52,000 Dividend Payable $15,000 Inventory $60,000 Interest Payable $720 Prepaid Insurance $1,500 Short term loan $24,280 Fixtures $24,460 Stockholders’ equity $51,460 Total Assets $142,460 Total Liabilities and equity $142,460     Example memo 2 after consideration of the December 12th meeting where the cost accountant stated that the traditional use of target cost strategy will not give us accurate results to meet the expected profit that is equal to or exceeds 12% of assets, we conducted an analysis to determine if her assumptions were correct. In addition, we looked at a new approach of cost-based pricing. We are optimistic that next year’s profit of 12% total assets is an attainable goal if we increase the price per unit, and are able to cut back on variable costs per unit. During the manufacturing process SCG has completed research to solidify that garden centers are their target market. The use of the target-cost strategy helped develop our current price by considering the market-driven strategy that is influenced strongly by competition, character of customers, and quality of customer intelligence. The goal of this strategy is to put a lot of pressure on the product designers to cut costs as much as possible. This however is a great model early in the product life cycle, as its primary advantage is to gain company success in any competitive market. The advantages of this method allows the prices  to be more realistic and proactive, because it aims to calculate acceptable costs based on the price people are willing to pay and meet customers’ requirements.  Now that we have seen the demand of the market, we can find benefits from cost-based pricing. Calculations of the selling price are examined by the complete industry value chain as well as all of
Answered 2 days AfterMay 29, 2022

Answer To: please check the attached files, the memo should be no more than a page and a half and one page is...

Prince answered on Jun 01 2022
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Memo
The static budget is a budget with which a company begins operations. The static budget is one that is based on
projected production numbers. After budget period has ended, the flexible budget is created. Utilizing actual output data from the budget period, this sort of budget clearly signifies what the static budget should've been. The flexible budget provides the actual results as well as the budgeted components from the static budget, such as cost and predicted sales.
In comparison to a static budget, the flexible budget lets companies to experience greater deviations. Before the budget period begins, assumptions and predictions regarding sales, the marketplace, economic conditions, and other things that affect a firm are made; these assumptions may or may not be right. The flexible budget's information is based on real results, allowing the company to fine-tune the static budget to correctness and compare results. The company compares the flexible budget's actual line-by-line expenditures and earnings against the static budget's estimates. Variance data, such as the gap among actual and estimated sales and projected and real operating costs,...
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