Peyton Approved Budget Variance Report

This document provides a solution to a budget variance report assignment, focusing on the concept of operating budgets and variance analysis. It explains different types of variances, such as material cost variance and labor cost variance, and discusses potential causes like inaccurate budgeting, changes in economic conditions, and employee theft. The solution also highlights the importance of variance analysis in identifying issues and taking corrective actions. The feedback suggests the need for more specific details on calculated variances for Peyton Approved, including cost/price, efficiency, and total variances for labor and materials, along with a discussion of their potential causes.

PEYTON APPROVED BUDGET VARIANCE REPORT
(An) Operating Budget budget is a detailed statement which shows estimated Incomes
incomes and Expenses expenses of an organization based on the forecasted sales revenue
during a given period. It generally consists of various budgets such as Sales Budget,
Purchase Budget, and Production Budgets etc. A variance analysis is a measurement of
(the) variance between actual cost and the standard cost. Thus Variance a variance
analysis can be used to review the performance of an organization.
A divergence from the predetermined rates, expressed ultimately in money value,
generally used in standard costing and budgetary control system [This is a sentence
fragment.]. Variances which are profitable for the organization are known as Favorable
favorable variance(s) whereas variances which increase the cost for the organization are
known as Unfavorable unfavorable variance(s). Material cost variance is the difference
between the standard material cost for actual output and (the) actual cost incurred.
Material efficiency variance is the difference between in material costs due to the usage
of material. Labor cost variance is the difference between the standard labor cost for
actual hours worked and (the) actual wages paid. Labor efficiency variance is the
difference between actual hours worked by the workers for production of units and the
standard hours required to produce the actual quantity.
The variance(s) may arise due to the inaccurate budgeting, Changes in the economic
realities, and Employment employment theft [This is a sentence fragment.]. The
inaccurate budgeting means due to (a) bad guess of Income income and expenses of the
future periods [It means what?]. The change in economic realities refers to the company
is experienced experiencing an increase in cost or decrease in revenue due to change(s) in
the market conditions. The Employment employment theft refers to employees
perpetuates perpetuating theft or fraud which is difficult to detect and becomes the reason
for the variance for the performance of the company.
(An) Operating Budget budget is essential for an organization for the preparation of
Master master budgets. Variance analysis helps management in the determination of
determine (the) reason for these variance and (the required) corrective action thereon.
Good start! However, you need to provide more detail on the specific variances you
calculated for Peyton Approved. What were the cost/price, efficiency, and total
variances for labor and materials? You also need to discuss the potential causes of
those specific variances.