...Solartronics, Inc. Company Summary Solartronics , Inc. is a small company that producing solar energy panels. It had established since mid-1977. At first, this company had some bad years but at the end of 1983 it had survived and was able to position itself as a reasonably good-sized firm within the industry. Important Issue In the autumn of 1983, the company was willing to “professionalize” itself by hiring new controller and financial manager, Mrs. Lisa Blocker, to replace a full-time, full charge bookkeeper. Mrs Blocker made a new, summarized income statement using monthly basis. Company Problem The new summarized income statement for January 1984 was confusing for the company’s president and general manager, Mr. John Holden. SOLARTRONICS, INC. (B) Summarized Income Statement January 1984 Sales $165,000 Less: Cost of good sold (at standard) 108,900 Gross margin $ 56,100 Less: Selling expenses $26,500 General corporate overhead 18,000 Operating variances: Direct labor $(3,500) Direct material 500 Variable factory overhead (1,500) Fixed factory overhead—spending 2,000 Fixed factory overhead—volume (17,500) 20,000 64,500 Profit before tax $ (8,400) Mr. Holden had not expected that the firm report a loss for the month of January. He wondered if the first month’s results were bad in terms of the budgeted results for the year. While he knew that sales had been down...
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...Case Study Solartronics, Inc. Randy S Carter Sr. Ottawa University Introduction Solartronics Inc. is a small manufacturer of solar energy panels. The company has been in business since 1977. Solartronics has had some bad times has grown into a good sized company with in the solar panel industry. This paper will look at how John Holden, president and general manager of Solartronics may have seen in the Summarized Income Budgeted Income Statements to make Mr. Holden think that the company would meet budgeted results. Why are the reported results for January so poor, particularly in light of the expected, average monthly profit of 30,000? Solartronics, Inc.’s summarized income statement shows that the company had sales of 165,000. But in budgeted income statement it was 3000000/12=250000 in average monthly. The problem is that direct labor, variable overhead and fixed factory overhead were not favorable because these were higher than those of budget. This can be seen by looking budgeted income statement. What additional data would be useful in analyzing the firm’s January performance? Why? To better be able to analyze Solartronics January performance operating variance such as direct labor, direct material, variable factory overhead, fixed factory overhead-spending, fixed factory overhead-volume were not given according to monthly. If there are revenue variance, selling price variance, mix and volume variance, mix variance, volume variance, other revenue analysis...
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...The Vershire Company has to keep tight controls over their plants, budgets, and performance in terms of efficiency and effectiveness, because customers can easily purchase from another manufacturer if cost, quality, and service are not met. The planning strength of the Vershire Company is that a sales budget is formulated at the corporate level and starts with a forecast, which is created and sent to the divisional managers for review. This allows divisional managers to have some input for their budget, which will add to the accuracy. Corporate controllers also visit each plant for additional input before final submission. The company I work also formulates a sales budget; we are actually starting the process in October. We look at our historical sales data, our current sales, and our sales targets for the coming year. The sales budget leads to the development of the other budgets, manufacturing, production, purchasing, inventories, sales and other expenses. Our budgets are usually determined by end of November, no later than mid December for the New Year. All departments have input and are responsible for their budgets. Our forecasting and planning efforts are examined on a monthly basis throughout the year as well as daily inputs from the sales quotation department through their quote follow-up efforts. This allows us to keep tighter controls on inventories to keep us within the set budget as well as keep reasonable lead times for the different product lines. The weakness...
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...Chapter-10 Case: 10-2(Solartronics, Inc.) Question1: Why are the reported results for January so poor, particularly in light of the expected, average monthly profit of $30,000? Answer: In the summarized income statement shows that sales is 165,000 but in budgeted income statement it was 3000000/12=250000 in average monthly. On the other hand direct labor, variable overhead and fixed factory overhead were unfavorable because these were higher than those of budgeted income statement. Question2: What additional data would be useful in analyzing the firm's January performance? Why? Answer: In budgeted income statement, Operating variance such as direct labor, direct material, variable factory overhead, fixed factory overhead-spending, fixed factory overhead-volume were not given according to monthly. If there are revenue variance, selling price variance, mix and volume variance, mix variance, volume variance, other revenue analysis, market share variance, industry volume variance, expense variance in the analysis statement given then it would be useful data for analyzing the firm's January performance because these data can inform us the difference between the revenue and expenses. Balanced Scorecard Basics The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external...
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...Solartronics, Inc. Solartronics, Inc. Company Summary Solartronics , Inc. is a small company that producing solar energy panels. It had established since mid-1977. At first, this company had some bad years but at the end of 1983 it had survived and was able to position itself as a reasonably good-sized firm within the industry. Important Issue In the autumn of 1983, the company was willing to “professionalize” itself by hiring new controller and financial manager, Mrs. Lisa Blocker, to replace a full-time, full charge bookkeeper. Mrs Blocker made a new, summarized income statement using monthly basis. Company Problem The new summarized income statement for January 1984 was confusing for the company’s president and general manager, Mr. John Holden. SOLARTRONICS, INC. (B) Summarized Income Statement January 1984 Sales $165,000 Less: Cost of good sold (at standard) 108,900 Gross margin $ 56,100 Less: Selling expenses $26,500 General corporate overhead 18,000 Operating variances: Direct labor $(3,500) Direct material 500 Variable factory overhead (1,500) Fixed factory overhead—spending 2,000 Fixed factory overhead—volume (17,500) 20,000 64,500 Profit before tax $ (8,400) Mr. Holden had not expected that the firm report a loss for the month of January. He wondered if the first month’s results were bad in terms of the budgeted results for the year. While he knew that sales had been down because of the normal seasonal...
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