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You just closed Q3 for a mid-sized defense and aerospace manufacturer that reports under U.S. GAAP, and your controller asks you to prepare the management reporting package for leadership. The prior forecast assumed stable program execution, but actual results came in below plan and leadership wants a clear explanation before the monthly review. You are expected to reconcile the P&L, explain the main drivers, and comment on whether the miss appears operational or timing-related. Assume depreciation is included in SG&A and there were no one-time restructuring charges in the quarter.
| Metric | Q3 Forecast | Q3 Actual |
|---|---|---|
| Revenue | $128,000,000 | $121,500,000 |
| Cost of goods sold | $96,000,000 | $93,800,000 |
| SG&A | $18,500,000 | $19,700,000 |
| R&D expense | $4,200,000 | $4,600,000 |
| Interest expense | $1,100,000 | $1,100,000 |
| Tax rate | 24% | 24% |
How would you manage this financial reporting package, quantify the key variances versus forecast, and explain what the quarter says about operating performance and the outlook for the next quarter?