The Budget for Department 5 of Plant M for the Current

question 95

Essay

The budget for Department 5 of Plant M for the current month ending March 31 is as follows: $\begin{array}{lr}\text { Materials } & \$ 206,000 \\\text { Factory wages } & 265,000 \\\text { Supervisory salaries } & 67,800 \\\text { Depreciation of plant and equipment } & 35,000\\\text { Power and light } & 22,500 \\\text { Insurance and property taxes } & 15,500 \\\text { Maintenance } & 9,700\end{array}$ ?
During March, the costs incurred in Department 5 of Plant M were materials, $204,000; factory wages, $285,000; supervisory salaries, $63,600; depreciation of plant and equipment, $35,000; power and light, $21,360; insurance and property taxes, $14,400; maintenance, $9,456.
(a)Prepare a budget performance report for the supervisor of Department 5 of Plant M for the month of March.
(b)Are there any significant variances (greater than 5%) of the budgeted amounts that should be examined by the supervisor?

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Definitions:

Bank Reconciliation

A process that explains the difference between the bank balance shown in an organization's bank statement, as provided by the bank, and the corresponding amount shown in the organization's own accounting records at a particular point in time.

Outstanding Cheques

Checks that have been written and recorded in the payor's ledger but have not yet been cashed or cleared by the bank.

NSF

An acronym for "Non-Sufficient Funds," indicating that an account does not have enough money to cover a presented check or withdrawal.

Cash Management

The process of collecting, managing, and investing a company's cash flows in a way that maximizes liquidity and profitability.