a ) What are your fixed costs ? Segregate them in the budget model .
b ) Determine how variable costs change as activity measures change . How can this information be applied ?
c ) Create the budget model , ensuring fixed costs are hard coded into the model ( variable costs are stated as a percentage of the relevant activity measures or as a cost per unit of activity measure ).
d ) Add actual activity measures to the model . Make sure all information is added accurately .
e ) Add the flexible budget calculations to the budget model . Make sure all information is accurate .
f ) Compare the flexible budget to the actual expenses . What does this inform ? Be sure to discuss the following variances :
i . Static budget variance , including sales volume and flexible budget variances
ii . Price and efficiency variances for direct materials and direct labor
iii . Spending and efficiency variances for variable manufacturing overhead
g ) Determine the aspects of the budgeting process that are in need of improvement . Justify your response .
h ) Interpret what budget variances represent . Should all variances be investigated ?
Guidelines for Submission : Your paper must be submitted using the Student Workbook to present your budgets and variances and a 1 – 2 page Microsoft Word document with double spacing , 12-point Times New Roman font , and one-inch margins to explain your findings .