Peyton Budget and Analyzing Assignment Example | Topics and Well Written Essays - 1250 words

Peyton Budget and Analyzing - appointment ExampleThe sales budget for Peyton Approved shows that the smart set forecasts sales to be $1,080,000 for the quarter ending folk 2015. To cover the sales and the required ending inventory, the company needs to produce 60,000 units. That would require 27,380 units of raw fabric at a cost of $212,195. The total labor requirement is 30,000 hours at a cost of $480,000. date the budget estimate for direct material for the period is 36,320 units, the actual amount of direct labor is 31,000 units. The budgeted determine per unit of direct material is $7.75. It is also the actual price. Given the difference is only on the turn of units of direct material, the direct material price variance is zero. As for the direct material aptitude variance, the company records a hearty efficiency variance of $41,230. That gives a favorable total material variance of $41,230. in that location was no material price variance as the budget price and the actual price were the same. As for the favorable efficiency variance, there may have been several causes. As the actual achievement shows, there was less direct material usage than the budget estimates. That may have been a result of efficiency in utilizing material in the production process. The procurement process may also have contributed to the favorable efficiency variance. Where there is purchase of high quality material, there would probably be no wastage and the production may use up less material than the estimates (Nobles, Mattison and Matsumura, 2014).