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The Budget-To-Actual Variance Report For Wood's Furniture

1036 Words5 Pages

The purpose of this memo is to summarize the budget-to-actual variance report for Wood’s Furniture Inc. as of December 31, 2017. While Wood’s Furniture expected to generate $70,000 in net profit by the end of the year, the organization actually reports $53,800 as net profit which entails to 23% below expected. Based on monthly reports, the net profit was expected to go down, but 23% decline seems to be a concern.
Mentioned below is my high level analysis of some of the items from the report and I would like each of you to review and respond back with your detailed analysis related to your department.
Year-to-date Revenues:
The total revenue budgeted for this period was $1,700,00, while actual revenue earned is $1,575,000. This 7% deficit in …show more content…

This variance is comparatively higher than other materials. I would like management of purchasing department to research the cost increase on metal. Arguably, the fluctuation in commodity prices might have affected it’s price. However, I will recommend to do market research and find out if similar quality metal is available at a budgeted price from different vendor. I will also suggest purchasing and production team to work together to come up with an accurate quantity of materials required to meet our production target so that we can take advantage of discounted volume price from this vendor and not overpay for ordering in chunks. In addition, production management should perform an analysis of quality of metal used in manufacturing and make sure that appropriate quality material is used rather than using higher quality material when not required and paying more …show more content…

It appears that we are not using our skilled labors efficiently. My suggestion to production management will be doing some analysis of our manufacturing process and make sure that tasks assigned to skilled workforce are executed efficiently. In addition, I will recommend production management to work with purchasing management and see if we can improve efficiency with better quality materials without deviating from budgeted material cost. I would also like HR department to come up with some team building programs which will motivate the workforce, boost the morale and in-turn, improve the

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