Variance Analysis and Performance Evaluation

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TUI University Tedrick Holmes Module 3 Case 1 Variance Analysis and Performance Evaluation 2 ACC 201 8/3/2011 Introduction In order to understand this case then we must first understand the difference between variable and fixed costs. Variable costs are the costs of labor, material or overhead that change according to the change in the volume of production units. Fixed costs are defined as a cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense. As we look at the Pappadeaux case we will discuss how these differences between these two costs can directly affect a business. Analyze and evaluate the case of the Pappadeaux I think that in this case, Harry was unfair in his assessment of Gregory’s performance. Based on the projected budget below one would think that the budget was acceptable as is and that it left room for Gregory to be successful. |Pappadeaux Restaurants - San Diego No. 1 | |Income Statement | |For the Year Ended April 30, 2007 | | |Budget |Actual |Variance | |Sales |900,000 |800,000 |(100,000) | |Expenses | |

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