Flexible Budget Assignment-Analyzing the Performance Report

For this Assignment, you will continue in your role of a consultant to provide information about using accounting information for decision making to a fictional organization so it can better prepare for the future. Last week, you submitted the first of two reports on financial information and budgeting. This week, you will submit the second report, which will focus on performance reports and balanced scorecards.

In addition to the requirements that follow, be sure to incorporate into your report references to appropriate academic sources, such as those found in this week’s Learning Resources or those in the Walden Library.

To prepare for this Assignment: (Use attached document and Templates)

• Download the Week 2 Part 1 Assignment Template.
• Download the Week 2 Part 2 Assignment Template.
• Your Instructor will provide part of the data to complete the calculations for this week’s Assignment. To access that information, refer to Doc Sharing:

Submit your completed business report and accompanying Excel file. Your report should be 3–5 pages in length (excluding title page and references) and should address the following:

Analyzing the Performance Report—Preparing a Flexible Budget

Performance Report for Flexible Budgets

Budgets are rarely flawless, as you are surely aware. In all honesty, it’s better that they are adaptable. In fact, that is the reason we frequently refer to the budget used to plan costs as the flexible budget. When accountants are attempting to reconcile their data at the conclusion of an accounting period, real figures take the place of the flexible budget and other assumptions.

The flexible budget performance report is one of the key papers that accounting uses to reconcile everything and make future plans. In other words, it delivers on its promise to give feedback on how effectively the flexible budget performed in real-world business situations. In this session, we’ll look at how to create a flexible budget performance report, where the data comes from, and why one should be created in the first place.

Creation

Therefore, at the conclusion of each period, a flexible budget performance report is generated. One is simple to make, and the technique is extremely simple. List each category where expenditures have been incurred first. List all of the actual costs in the next column. Add the pertinent numbers from the flexible budget next to them. Note the gap between the flexible budget and the actual spending in the last column. If there is a deviation, make careful to note whether it was favorable—meaning money was saved—or unfavorable, meaning more money had to be spent than was planned.

Obtaining Data

Fortunately, it’s not too difficult to locate the data needed to construct the flexible budget performance report. Receipts ought to provide you access to the precise sums that your department has spent. The flexible budget generates the anticipated figures. Simply deduct the actual spending from the appropriate amount in the flexible budget to determine the deviations. If the outcome is good or negative, make careful to note it because this will indicate if the variance is favorable or unfavorable.

For the first part of your report, you will examine a performance report based on the static budget about which the owners are very concerned. They feel that the unfavorable variances that are reflected in the report indicate an area that needs to be addressed, but they are looking to you for a better understanding and concurrence. To access this performance report, refer to the data that your Instructor provided in Doc Sharing for this week’s Assignment.

To complete this part, address the following:

• Using the Week 2 Part 2 Assignment Template and the data provided by your Instructor in the Doc Sharing area, prepare a performance report that includes a flexible budget.
  • Note: In addition to submitting your work in Excel, you will insert your performance report into your main document.
• In your report, analyze why the original report was incorrect and explain the conclusion you reached based on the performance report.
• Then identify at least three questions regarding the performance report and include a rationale for why you asked each question.

The Balanced Scorecard

One of the owners read recently that the balanced scorecard is a strategic-based performance management system and is wondering if it would be beneficial to implement a balanced scorecard approach. For the second part of your report, you will provide an analysis of how using the balanced scorecard can benefit the company. To complete this part, address the following:

• Explain how the balanced scorecard communicates strategy and provide examples.
• Examine the four quadrants on the balanced scorecard, how they are related, and what their impact is on financial performance.