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The performance report is prepared for Crazy Joes that is a mobile phone retailer where the performance of sales manager is evaluated. Report depicts the difference between budgeted performance for actual sales volume and actual performance of company. Performance of production manager is evaluated by ascertaining major difference between estimated budget numbers at the beginning and ending accounting period. The preparation of performance report helps mangers in analyzing the area of business that needs improvement and areas that are meeting their budgeted goals (Nazal 2014).
From the above table, variance in the production level can be depicted using budgeted and flexible budget. The actual level of production is more than the budgeted. Looking at the figure of cost of raw materials, the budgeted cost is recorded at $ 90000 and the flexible budget is recorded at $ 975000. However, the actual cost of raw materials is recorded at $ 95700. Therefore, actual cost incurred for purchasing raw materials is less than flexible budgeted cost as indicated by positive variance. Flexible budgeted cost of direct labor is recorded at $ 117000 as against actual cost incurred for direct labor stood at $ 114750. Therefore, positive variance is recorded at $ 2250. It indicates favorable situation for the Crazy Joes as they are able to curtail cost as indicated by favorable variance.
The actual variable cost overhead is computed at $ 57000 as against $ 58500 for flexible budgeted cost. It depicts positive variance of $ 1500 that is indicative of favorable situation.
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