This determine how well Peyton Approved did compared


This paper will
discuss the budget variances for Peyton Approved. The informational data is
pulled from their sales, production, material and labor costs, as well as their
administrative budget. A budget variance is defined as “the difference between
what a company budgeted for expenses and revenue, versus the actual amount” (S. Bragg, 2013). We can use the
following budget variance as a guide and determine how well Peyton Approved did
compared to their expectations. We can also determine the budget valences for
each month and determine if the outcome was favorable or unfavorable.

When looking at
the budget variance report for Peyton Approved, we can see that the company is
on the right track according to their original budget worksheet. When looking
at the raw materials budget, the materials needed does take into account
materials unsold from the previous month. Budgeting unsold materials from the
previous month is a smart move by Peyton Approved, this ensures that they have
enough products each month. When looking at the variance report, it shows you
both the favorable and unfavorable results. When looking over the variance
report, the cost/price variance is 0. What this means is there was no change in
cost per unit of materials. This is called efficiency variances is a measure of
how well the company uses their materials and management (Nobles, Mattison,
& Matsumura, 2014). The labor efficiency however shows an unfavorable variance.

One area that
needs to be investigated is why the labor efficiency was unfavorable. This
could be due to several reasons such as the machines not preforming properly
thus causing delays in the manufacturing process, or if there was low employee
moral that might influence the production. Overall Peyton Approved is running a
good business and for the most part they are doing a really good job financially
and within budget. Once they get the labor efficiency up to more favorable
standards, they will be able to continue to be successful and have future

While there are
both favorable and unfavorable results in the variance report, Peyton Approved
is doing an excellent job of managing their materials and how they are
purchasing materials for their products. Once they investigate the labor, they
can put a plan in place that will better utilize the best of their labor and
have a favorable outcome on their next variance report. With the variance
report, they will continue to be a successful company that will continue to
manage their finances responsibly