Part #3

You will need to submit a budget report to the CEO, including an explanation of the utility of master
budgets. You will also submit a variance report that shows how the company is performing versus
budgeted amounts. Use the following data.

Amount of Goods Sold Per Quarter:

Q1 Q2 Q3 Q4
Chairs sold per quarter 1150 1200 1250 1400
Tables sold per quarter 900 950 1000 1150
Dressers sold per quarter 650 700 750 900
Target Sales Goal Per Quarter:

Goods Quantity
Chairs 1300
Tables 1100
Dressers 800
Q1 beginning inventory:

Goods Quantity
Chairs 120
Tables 90
Dressers 70
Assume that the material and labor costs from Part 1 are standards. Compare those standard costs to
the actual amounts listed below. These are the actual amounts used for the entire fiscal year:

Actual amount of wood purchased and used 46,120 bd. ft.

Actual cost of wood purchased and used $80,028
Actual amount of direct labor hours 17,900
Actual cost of direct labor $275,550
Within your analysis, make sure to include the following:

Create variance reports for Q1, Q2, Q3, and Q4 against the Quarterly Budget.
Generate a quarterly budget for the upcoming year that includes sales, production, materials and labor
budgets. Assume a 10% increase in sales.
Explain how a master budget can be a useful tool in aligning a company's operations to its long-term goals.
Discuss how a variance report can be used to direct management toward production issues.

Your explanations of master budgets and variance reports should be 500 to 750 words in length.