whatsapp

Connect on Whatsapp : +1 206 673 2541, Uninterrupted Access 24x7, 100% Confidential. Connect Now

MEMO: Widget Company Performance | Homework Help Online

TO:

FROM:

DATE:

SUBJECT: Causes of Variances in the Performance Report

The variance section of a performance report compares what was budgeted for against what was actually spent or earned. In the Widget Company performance report the variances are observable in revenue (with the actual revenue being higher than the budgeted revenue), variable costs (with the actual variable costs being higher than the budgeted variable costs), and the fixed costs (with the actual fixed being higher than the static budget). These variances have increased expenditures in the company to unexpected levels, leading to a loss of $4,710 which may hamper the company’s performance

Causes

Possible causes of increased revenue range from a rise in customer numbers, an increase in transactions per customer, an increase in average transaction size and an Increase in prices. All these are favorable to the company and can actually help it turn a great profit when done in combination. Possible causes of increased variable costs include a rise in production inputs, an increase in labor the company requires, etc. These can be unfavorable to the company if not accompanied with revenue increase. Possible causes of fixed costs include increases in depreciation, insurance, interest expenses, leases, property taxes, salaries and utilities. All these are unfavorable for the company.

Remedies

Possible remedies for the variances are many and depend on the company’s strategies. Variable cost variances are expected whenever a company increases its productivity with the aim of increasing revenues and therefore profits. However, a cost benefit analysis is necessary to identify break even points that will prevent variable costs from eating into the increased revenues. The same applies to fixed costs which must be justified through increased revenues e.g. an increase in interest expenses because of loans taken for new equipment should be justified in better productivity which will boost revenues.

 

Cite this Page

MEMO: Widget Company Performance | Homework Help Online . (2021, December 17). Essay Writing . Retrieved September 27, 2022, from https://www.essay-writing.com/samples/memo-widget-company-performance/
“ MEMO: Widget Company Performance | Homework Help Online .” Essay Writing , 17 Dec. 2021, www.essay-writing.com/samples/memo-widget-company-performance/
MEMO: Widget Company Performance | Homework Help Online . [online]. Available at: <https://www.essay-writing.com/samples/memo-widget-company-performance/> [Accessed 27 Sep. 2022].
MEMO: Widget Company Performance | Homework Help Online [Internet]. Essay Writing . 2021 Dec 17 [cited 2022 Sep 27]. Available from: https://www.essay-writing.com/samples/memo-widget-company-performance/
copy
Do My paper price
Pages (550 words)
Approximate price: -