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Financial Analysis Task 2

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Competition Bikes Budgeting and Variance Analysis Report
Western Governor’s University

Competition Bikes Budgeting and Variance Analysis Report Competition Bikes, Incorporated (Inc.) makes bicycles for professional and other highly accomplished riders who compete in bike races, biathlons, and triathlons. Approximately sixty percent of all race winners have been victorious using bicycles designed by Competitions Bikes, Inc. This extraordinary success rate is a topic of conversation among racers and has led to exponential success for founder Larry Ferguson who formed the company in 2001 in his garage. Competition Bikes is known for quality products and is leader in the market with the CarbonLite products they provide. These results are transparent in the budgets from the last few years; however, the most recent budget contained several unfavorable variances that may be an indication that some changes are needed. Budget planning, identifying unfavorable variance, and correcting those variances can make or break the financial position of a company. The following is a summary report that discussed budgetary areas that raise concern in budget planning; evaluates the flexible budget and its variance; recommends corrections actions for areas of concern based on the variance analysis; and discusses how the concept of management by exception could be applied to the variances.
Budget Planning, Allocation of Resources, and Management Control A master budget provides a forecast based on sales projections for the next budget period. The three major budget process activities can be summed up as planning, allocation of resources, and management control. Planning a budget involves assessing all the issues integral to meeting the goals of the company. Allocation of resources involves an analysis of how scarce resources are…...

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