FLEXIBLE BUDGETING3

From the revised performance report, 45,000 units accounts for $34,000 as the variance for operating income.

4.

For Montevideo Manufacturing Inc., the cost control depends on reducing the expenses on the business activities of the company. The management can assess this by determining each cost and evaluating whether they have favorable or unfavorable variance. The total variance for the direct manufacturing labor, direct materials, and variable factory overhead is $26,000. Thus, the manufacturing area did not do an excellent job of controlling the production costs. Additionally, the variance under fixed factory overhead is $5,000 that is favorable. Thus, the favorable variance for fixed factory overhead may have resulted from an inaccurate estimate regarding the budget.

5.

Ethical professional practices are a code of ethics that outlines the required values and best practices of a business and the proper approach that the company can use to address the issue at hand. The standards in the ethical professional procedures that can apply to this situation include; competence and credibility. For competence, it helps an organization prepare complete and comprehensive reports that provide recommendations for the business based on relevant and reliable information presented by IMA under ethical professional practices. For credibility, it enables the company to communicate appropriate and reasonable information to allow the user to understand it quickly. The user must understand the recommendations, reporting, and analysis to strengthen its code of ethics.