Budget Analysis Report: Assessing Bird Feeder's Financial Performance

This report provides a comprehensive analysis of the budget for Bird Feeder, examining various aspects of financial performance and variance analysis. The report begins by outlining the essential components of the budgeting process, including data collection, estimation, and break-even point calculation. It then delves into the specific financial data of Bird Feeder, highlighting positive sales variances and negative variances in direct materials and direct manufacturing labor. The analysis identifies inefficiencies in the utilization of direct materials and labor, leading to unfavorable variances. The report emphasizes the importance of investigating all variances to understand the company's performance accurately. The report suggests that the management should focus on the historical data to estimate future results and should improve the utilization of direct material and direct labor. The report concludes by referencing the sources used for the analysis.

For every organization budget process is very important aspect. it provides top management
the insight of performance of company and also provide basis for formulation of future policy.
Budgeting process consists five essential aspect those are needed to be followed.
1. Company need to determine sources of information for the budget process.
2. Before starting budget process, management should determine what they want from such
process i.e. object of budget process should be clear.
3. Management should collect the requisite data that they need to formulate budget process
4. This is the most important step of budget process. in this step, management should estimate
the projected result
5. at the end, management need to calculate their break even point. this is very important aspect
of budget process. on the basis of this step, management determine their other results.
on analyzing the budget of Bird Feeder, Management have made some wrong estimates.
management should focus on the historical data to estimate future results. almost all estimation
related to use of direct material, direct manufacturing labor and variable manufacturing overhead
are wrongly estimated. Management should improve this aspect of process. (Adler, 2013)
on analyzing the budget of Bird Feeder, we can find that company has been showing a positive
sale variance on comparing actual sale revenue with budgeted sale revenue. however, company
has been showing a negative variance for direct material and direct manufacturing labor. The
main reason for unfavorable direct material over utilization of direct material in production
process. Management should focus on effective utilization of direct material. Similarly, Direct
manufacturing labor are also showing unfavorable. the reasons for result are also ineffective

utilization of direct labor. management has taken extra direct labor hour to produce a unit of
output. (Lucey, 2003)
It is important to investigate all variance because every variance represent some performance
aspect of company. so in order to get accurate result and actual scenario of performance
management should check all the variance.

Reference:
Adler, R W (2013) Management Accounting: Making it World Class, London, Routledge
Lucey, T (2003) Management Accounting, 5th Ed., London, Continuum