| Course | GB519 Measurement and Decision Making |
|---|---|
| Unit | Unit 7 |
| Paper type | Variance analysis memo |
| Length | About 780 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for GB519 Unit 7
An $86,000 Shortfall Explained: A Unit 7 Variance Analysis Memo With a Flexible Budget
[Student Name]
Purdue University Global
GB519: Measurement and Decision Making
Unit 7 Variance Analysis Memo
[Instructor Name]
[Date]
The lab, its suppliers and every figure are composite and illustrative; the sources cited are real.
To: Owner, Fernhill Orthotic Lab
From: Controller
Subject: Second-quarter results against plan
Summary
Operating income for the quarter was $40,120 against a plan of $126,144, a shortfall of $86,024. About $50,100 of it comes from volume, mostly because a hospital system's pediatric clinic opened in July instead of April and its braces moved into the third quarter. The most important controllable problem is technician time lost to remakes after an April scanner software update, which cost about $26,500 in efficiency and overtime. I recommend correcting the scan alignment step this month and reviewing the resin supplier's surcharge before our next order.
Exhibit: Static Budget, Flexible Budget and Actual
Devices: static, 4,000 foot orthosis pairs, 1,080 AFOs and 200 spinal braces; flexible and actual, 3,950 pairs, 900 AFOs and 200 braces.
Revenue: static $1,013,600; flexible $933,600; actual $939,600.
Variable costs: static $457,456; flexible $427,580; actual $477,480.
Contribution margin: static $556,144; flexible $506,020; actual $462,120.
Fixed overhead: static and flexible $310,000; actual $302,000.
Selling and administrative: $120,000 in all three columns.
Operating income: static $126,144; flexible $76,020; actual $40,120.
The gap between the static and flexible columns, $50,124 unfavorable, is the sales volume variance. The gap between the flexible and actual columns, $35,900 unfavorable, contains six price, spending and efficiency variances.
How the Variances Are Judged
A variance gets a paragraph if it exceeds $10,000 or 5 percent of its flexible budget line, whichever is smaller. Those below the threshold are listed. Measuring spending against a budget resized to the devices really made keeps a slow quarter from looking like overspending, because a lab that made 180 fewer AFOs should have spent less on polypropylene and technician time (Garrison et al., 2021).
Variances Above the Threshold
Sales volume, $50,124 unfavorable. Almost all of it, $48,024, comes from 180 fewer AFOs at $266.80 of contribution each. The hospital system's pediatric clinic, which Fernhill won in the first quarter, delayed its opening until July. The braces are not lost; they move into the third quarter, which the forecast should reflect. Fifty fewer pairs of foot orthoses account for the other $2,100.
Materials price, $21,000 unfavorable. Our polypropylene supplier added a resin surcharge of $0.60 a pound in April, applied to about 35,000 pounds. The purchasing lead should confirm whether the surcharge is temporary and seek a quote from a second supplier. The cost is mostly outside our control this quarter but not next quarter.
Remakes after the scanner update cost about 500 extra technician hours, and the overtime used to catch up cost $9,500 more, making this the largest problem the lab can fix itself.
Labor efficiency, $17,000 unfavorable. Technicians spent about 500 hours more than the standard for the devices made, at $34 an hour. The cause is concentrated: an April update to the scanning software introduced an alignment error on some ankle scans, and AFO remakes rose from about 6 percent to about 9 percent. The production supervisor should confirm the cause with the vendor, and the clinics should use the previous version of the alignment step until a fix is issued.
Variances Below the Threshold
Labor rate, $9,500 unfavorable: overtime to clear remakes; it falls below the threshold but shares the efficiency variance's cause.
Materials usage, $2,400 unfavorable: scrap from remade braces.
Spinal brace price, $6,000 favorable: a new payer schedule at our fitting clinic raised the average price by $30.
Fixed overhead, $8,000 favorable: a mill maintenance visit moved into July. This is timing, not saving, and the third quarter will carry it.
Actions
Scan alignment: production supervisor; vendor contact this week and a fallback procedure for clinics.
Resin surcharge: purchasing lead; second-supplier quote before the July order.
Forecast: sales manager; move the pediatric clinic's 180 braces into the third-quarter forecast.
Each action names a role able to confirm a variance's cause rather than a person to blame, because a variance is a question until its cause is known (Merchant & Van der Stede, 2017). Datar and Rajan (2021) add that efficiency variances are most useful when they are traced to a process, as this one is to a single software step.
Outlook
If the scan fix holds and the clinic's braces arrive as scheduled, the third quarter should recover about $48,000 of the volume variance and most of the efficiency loss, though the deferred maintenance and any continued surcharge will offset part of that.
References
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (17th ed.). McGraw Hill.
Merchant, K. A., & Van der Stede, W. A. (2017). Management control systems: Performance measurement, evaluation and incentives (4th ed.). Pearson.
GB519 Unit 7 instructions, in plain terms
In GB519 Unit 7 you analyze the gap between budgeted and actual results and report it to a manager. Open with a short summary giving the total shortfall, the share explained by volume, the most important controllable cause and the action proposed. Build an exhibit with three columns: the static budget, a flexible budget at actual volume and actual results. Compute the sales volume variance and the price, spending and efficiency variances. State a threshold for which variances get discussion and apply it consistently. For each significant variance, give its likely cause and a role able to confirm it. Close with actions and an outlook. Cite managerial accounting and control sources in APA 7.
Inside the GB519 Unit 7 example
The summary states $40,120 of operating income against $126,144 planned and names the scanner problem. The exhibit compares static, flexible and actual columns from devices to operating income. A threshold of $10,000 or 5 percent of the flexible line is stated, citing Garrison and colleagues. The volume variance traces to the delayed pediatric clinic. The materials price variance traces to a $0.60 resin surcharge, and the highlighted sentence links labor efficiency and overtime. Labor efficiency of $17,000 traces to an alignment error. Smaller variances are listed, including deferred maintenance treated as timing. Actions name roles, citing Merchant and Van der Stede and Datar and Rajan.
Where the points sit in the GB519 Unit 7 rubric
GB519 instructors grade this memo on a correct flexible budget and a clear account of what each variance means. The summary should give the whole answer briefly. A flexible budget that separates volume from spending earns significant credit, because it keeps a slow quarter from looking like overspending. A stated threshold applied consistently shows discipline. Each significant variance should have a likely cause and a role to confirm it. Linking related variances and spotting timing differences show judgment. Actions with owners complete it. The memo's APA 7 references are the Garrison text on flexible budgets, Merchant and Van der Stede on control and Datar and Rajan on efficiency variances.
Common GB519 Unit 7 mistakes, and how to avoid them
Many GB519 Unit 7 memos compare actual results with the original budget and call every gap overspending. Others list every variance at equal length so the important ones are lost. A common gap is the cause: a variance is a question, and the memo should propose a likely answer and a role to confirm it. Some writers treat deferred spending as a saving. Summarize first, flex the budget to actual volume, state a threshold, explain the large variances with causes and roles, list the rest and close with actions. It also helps to describe the volume variance's cause in business terms, here a clinic that opened three months late, and to say whether the lost volume returns next quarter, because that changes how worried the owner should be.
Get a GB519 Unit 7 example written to your instructions
Who reads the memo matters, so name the reader if the case supplies one, alongside the Unit 7 budget, actual results and the rubric. The flexible budget is built, variances computed and labeled, and the memo interprets the ones that matter with causes and next steps. The first custom sample is free and generally arrives within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GB519 Unit 7 questions, answered
How does the memo decide which variances matter?
It states a threshold, a dollar amount, a percentage of the budget line, or both, and applies it consistently. Variances above the threshold get a paragraph; those below are listed in one line so the reader knows they were seen. Where the case supplies a policy, the sample uses it. Where none is given, the chosen threshold and its reasoning appear in the memo.
Should the memo name a person responsible for each variance?
It names a role positioned to confirm the cause, such as the purchasing lead or the packaging supervisor, rather than assigning blame. A variance is a signal worth investigating, not proof of poor performance. Graders in many sections reward causes phrased as likely explanations with a named owner for follow-up, and mark down memos that treat a single number as a verdict.
Where can I find a free GB519 Unit 7 sample paper?
This page carries a full GB519 Unit 7 variance analysis memo for an orthotics lab, with a static, flexible and actual exhibit, a stated threshold, causes, actions and APA 7 references.
Why is the $8,000 favorable overhead variance not good news?
It comes from a mill maintenance visit that moved into July. The cost has not been avoided, only shifted, so the third quarter will carry it.
Why discuss the labor rate variance though it falls below the threshold?
It shares a cause with the labor efficiency variance: overtime was used to clear the remakes. Read together, the two show about $26,500 lost to one software problem.