You are hired as a new cost accountant to Ciccetti Corporation. The company manager, David, is having a meeting with you in his office. He brought you this budgeted income statement that was completed by the previous cost accountant. David asks you to provide him with a report explaining the statement in clear, straightforward language, and how you plan to handle the annual budget.
| Flexible Budget Performance Part 2 | |||
| Flexible Budget | Activity Variances | Planning Budget | |
| Customers served (q) | 36,000 | 33,000 | |
| Revenue ($4.80q) | $172,800 | $14,400 F | $158,400 |
| Expenses: | |||
| Wages and salaries ($36,900 + 1.60q) | 94,500 | 4,800 U | 89,700 |
| Supplies ($0.90q) | 32,400 | 2,700 U | 29,700 |
| Insurance ($13,300) | 13,300 | 0 | 13,300 |
| Miscellaneous Expense ($6,300 + $0.40q) | 20,700 | 1,200 U | 19,500 |
| Total expense | 160,900 | 8,700 U | 152,200 |
| Net operating income | $11,900 | $5,700 F | $6,200 |
Instructions
Write a 2–3 page report in which you:
- Explain the budgeted income statement.
- Outline how you would create annual budgeted financial statements.
- Analyze the difference between a static budget and a flexible budget, including the importance of each.
- Evaluate the importance of reading and correctly interpreting budgeted financial statements.
- Use three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment.
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