Module 4 - CaseBudgeting, Variance Analysis, and Performance EvaluationsAssignment OverviewT&P Fashion ShopsT&P Fashion Shops is a new chain that operates 10 stores in major malls throughout the United States. Each store manager is responsible for preparing a flexible budget for the store. T&P headquarters accumulates and analyzes the information for each store and in the aggregate.Below is the forecast (budgeted income statement) for the Houston store showing the breakdown of fixed and variable expenses in columns two through four. The last column shows the actual results. T&P Fashions - Houston Store Breakdown of Expenses (Forecast) Forecast Fixed Variable Actual Revenues $1,400,000 $1,260,000 Cost of Sales 790,000 790,000 760,000 Gross Profit $610,000 $500,000 Management 182,000 154,700 27,300 182,000 Shop assistants 258,000 154,800 103,200 262,000 Rent 23,200 18,560 4,640 22,000 Utilities 34,800 34,800 31,000 Misc. expenses 24,500 12,250 12,250 29,000 Total expenses $522,500 $526,000 Net income $87,500 $(26,000) ========= ========= Additional InformationVariable expenses are based on revenues and we assume that the percentage remains constant for flexible budgeting purposes.Fixed costs are all within the relevant range.Other expenses are all specific to this store. Headquarters pay for marketing and corporate overhead expenses.Case AssignmentRequired: Computations (use Excel)Prepare a flexible budget and show variances for the year that passed. Indicate whether the flexible budget variances are favorable or unfavorable.Headquarters are contemplating charging each store a 5% marketing expense based on sales. How will that affect the operating profit of the store and the money available for managerial bonuses based on actual results for the past year? Summarize the information in a table.Memo (use Word)Write a 4- or 5-paragraph memo to the division manager explaining the flexible budget variances; how to interpret the information and what action, if any to take. Comment on the 5% marketing proposal too. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.Short Essay (use Word)Start with an introduction and end with a summary or conclusion. Use headings.Discuss how to interpret static and flexible budget variances.What are the benefits of variance analysis? How can such analysis be detrimental rather than beneficial to the organization?Assignment ExpectationsEach submission should include two files: (1) An Excel file and (2) a Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.

In this case a full set of budgets will be prepared and presented in appropriate format.Reports will be prepared to explain how budget numbers were determined. The following are general requirements for this budget case.Specific requirements are listed after the relevant case data. Read the case and analyze the information.Prepare an operating budget in standard “income statement” format.Prepare a narrative report (or notes to the income statement) addressing why/how quantitative items were selected.The following items must be explained:Sales ForecastPurchases budget (raw materials, labor, all resources)Operating ExpensesPrepare a cash budget using any acceptable format.The following items must be explained or shown on the budget:The process by which cash inflows were projected.The process by which cash outflows were projected.The process by which financing, if applicable, was determined.How interest and other financing charges were calculated.Prepare a capital budget using any acceptable format.

Complete the payroll process for Wayland Custom Woodworking's fourth quarter pay periods. Please note that for pay periods after October 15, you must carry the current ending year to date (YTD) amounts as they appear from the prior pay period from each employee's Employee Earning Records form (EERF) to the rows titled "Prior Period YTD". Amounts from the current pay period will be auto-populated to the employee EERFs once you complete the payroll register, and will be combined with the prior period YTD amounts to determine the new current ending YTD amounts.