(Answered) Question - for the year gem associates projected that it

Accounting

Question - For the year GEM Associates projected that it would generate $2,000,000 of revenues; it actually generated $1,800,000. The company has consulted with you for help in understanding what is happening. You decide to address the following items.

Required:

a) What are the major weaknesses in the report above?

b) Recast the report (using a flexible budget instead of the static one presented) to enable a more meaningful way to enable cost control evaluation.

c) GEM Associates uses a management by exception philosophy. Use the report you prepared in (b) above and explain which costs are likely to receive additional investigation.

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