finance work Anthony Bennett Green Bottle Works (GBW), Business Assignment Homework Help

  

Anthony Bennett is the manufacturing
production supervisor for Green Bottle Works (GBW), a company that manufactures
stainless-steel water bottles. Trying to explain why he did not get the
year-end bonus that he had expected, he told his wife, “This is the dumbest
place I ever worked. Last year the company set up this budget assuming it would
sell 250,000 units. Well, it sold only 240,000. The company lost money and gave
me a bonus for not using as much materials and labor as was called for in the
budget. This year, the company has the same 250,000 units goal and it sells
260,000. The company’s making all kinds of money. You’d think I’d get this big
fat bonus. Instead, management tells me I used more materials and labor than
was budgeted. They said the company would have made a lot more money if I’d
stayed within my budget. I guess I gotta wait for another bad year before I get
a bonus. Like I said, this is the dumbest place I ever worked.” GBW’s master
budget and the actual results for the most recent year of operating activity
follow.
Chart is included on attachmenta. Did GBW increase unit sales by
cutting prices or by using some other strategy?
b. Is Mr. Bennett correct in his
conclusion that something is wrong with the company’s performance evaluation
process? If so, what do you suggest be done to improve the system?
c. Prepare a flexible budget and
recompute the budget variances.
d. Explain what might have caused
the fixed costs to be different from the amount budgeted.
e. Assume that the company’s
materials price variance was favorable and its materials usage variance was
unfavorable. Explain why Mr. Bennett may not be responsible for these
variances. Now, explain why he may have been responsible for the materials
usage variance
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Anthony Bennett is the manufacturing production supervisor for Green Bottle Works (GBW), a
company that manufactures stainless-steel water bottles. Trying to explain why he did not get the
year-end bonus that he had expected, he told his wife, “This is the dumbest place I ever worked.
Last year the company set up this budget assuming it would sell 250,000 units. Well, it sold only
240,000. The company lost money and gave me a bonus for not using as much materials and
labor as was called for in the budget. This year, the company has the same 250,000 units goal
and it sells 260,000. The company’s making all kinds of money. You’d think I’d get this big fat
bonus. Instead, management tells me I used more materials and labor than was budgeted. They
said the company would have made a lot more money if I’d stayed within my budget. I guess I
gotta wait for another bad year before I get a bonus. Like I said, this is the dumbest place I ever
worked.” GBW’s master budget and the actual results for the most recent year of operating
activity follow.
a. Did GBW increase unit sales by cutting prices or by using some other strategy?
b. Is Mr. Bennett correct in his conclusion that something is wrong with the company’s
performance evaluation process? If so, what do you suggest be done to improve the system?
c. Prepare a flexible budget and recompute the budget variances.
d. Explain what might have caused the fixed costs to be different from the amount budgeted.
e. Assume that the company’s materials price variance was favorable and its materials usage
variance was unfavorable. Explain why Mr. Bennett may not be responsible for these variances.
Now, explain why he may have been responsible for the materials usage variance

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