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You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF format (or combination) with each document lodged accompanied by the Relevant Coversheet (provided). Using a Report style is recommended but not compulsory. At the end of the budgeting period, Paulo Farmer, the production manager is reviewing the actual outcomes (in particular the direct materials and direct labour) and comparing these to the budget that was originally produced (in Part A). The following data related to the actual results recorded after the end of the quarter by Wittgenstein Pty Ltd, and are provided in the assignment data sheet:
Paulo is confused by the outcomes. He is aware that the budget that was created before the start of the quarter was a well considered and constructed estimate, and he did not expect that the actual outcomes would be exactly as forecast. However he is finding it difficult to understand the reasons for the differences.
Required:
Prepare a brief report to assist Paulo determine what might have caused the differences between the original budget and the final actual outcomes. Speculations of the causes are sufficient, provided they are supported by relevant calculations taken from the data provided, and the budget produced in Part A,. These calculations should be included in, and referred to, in your report. Restrict your discussion to the changes related to direct materials and direct labour. As Paulo is aware that budget estimates may be inaccurate at the time of budget preparation, do not include this particular cause of difference in your report.
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