Reference no: EM132464173

Point 1: Using the operating budget for the quarter, prepare the relevant costs for in-house production.

Point 2: Given avoidable costs, calculate whether the outsourcing decision will save costs in total.

Point 3: The data for the February master budget columns should come over from the operating budget worksheet. Verify that the master budget Net Income is the same as that reported in Sheet 1. Complete a flexible budget February, showing what net income should have been using the operating budget revenue rate, variable expenses' rates, and fixed costs.

Question 1: Given actual results and the operating rates, get a flexible budget for 1 month. Actual operating results for the month are provided.

Question 2: Calculate the variances between the flexible budget and actual results, as being either F for favorable or U for unfavorable. Determine how much of the Net Income variance was due to volume and how much was -related. Explain deviations from plan. How would you evaluate the actual results? What steps would you take to further investigate and possibly adjust your budget for the rest of the year?
Incremental Analysis: Do We Outsource?

Question 3: Given the relevant costs from the operating budget, reparep a worksheet comparing the relevant data to a vendor's price quote for doing the p currently done in-house.

Question 4: Given avoidable costs, calculate whether the outsourcing decision will save costs in total. Provide an opinion as to whether this business deal is acceptable. Are there any nonfinancial considerations?

Attachment:- variance budget.rar