INSTRUCTIONS: For this part of the project, you are given the Actual Budget figu

Question

INSTRUCTIONS: For this part of the project, you are given the Actual Budget figures for 2015 (in Columrn A). Based on the 2015 Actual figures, you are given a budget strategies (Column B) for each income statement list item to make the estimated budgets for 2016. You will provide. the 2016 Estimated figures for this assignment in Column D. The 2016 Actual figures are also given in Column E. Once you have provided the 2016 Estimated figures, the variance will be given in the far right column (Column G). As you can see, some equations are already entered into this spread sheet. The dvariances figures will change as you key in the 2016 Estimated column. (It is wise to check the calculations of the formulas once completed,) When the variances have been calculated, you should fill the favorable variance boxes in with yellow and the unfavorable variances with blues this can include the line totals as well, if applicable. An example calculation is given for the first line of the income statement (net sales line; Box D6). Once you have completed each of these calculations, and have the 2016 estimates and variances completed, continue to the next worksheet (Part Il Essay Questions). Provide the answers to each in the corresponding textboxes by clicking on the textbox and entering your answers in the areas shaded in green

Explanation / Answer

2016 Calculation Estimated Actual Difference Income Sales 51433.20*1.15 59148.18 58794.43 -353.75 Interest Income 3264.19*1.23 4014.95 4216.37 201.42 Gain/(loss) on asset sales 453.78*0.96 435.63 476.81 41.18 Total Income 63598.76 63487.61 -111.15 Personal expenses Wages 9679.63*1.19 11518.76 10851.52 667.24 Employee benefits 120.32*1.08 129.95 135.28 -5.33 Commission 4512.49*1.16 5234.49 5391.94 -157.45 Total Personal expenses 16883.19 16378.74 504.45 Operating Expenses Advertising 2544.31*1.25 3180.39 3264.38 -83.99 Bad debts 1897.27*0.79 1498.84 1697.11 -198.27 Cash discounts 2175.61*0.91 1979.81 1849.03 130.78 Depreciation 980.53*1.05 1029.56 1107.43 -77.87 Insurance 1276.24*1.15 1467.68 1278.27 189.41 Interest 2245.7*1.27 2852.04 2750.78 101.26 Maintenance & repairs 4615.78*0.90 4154.20 4318.01 -163.81 Rent or Mortgage 4522.09*1.08 4883.86 4788.82 95.04 Supplies 4452.47*1.15 5120.34 5155.19 -34.85 Utilities 1358.06*0.93 1263.00 1253.14 9.86 Other 761.68*1.19 906.40 851.74 54.66 Total Operating Expenses 28336.10 28313.90 22.20 Budget Totals Total Income 63598.76 63487.61 -111.15 Less: Total Personal expenses 16883.19 16378.74 504.45 Total Operating Expenses 28336.10 28313.90 22.20 Total expenses 45219.30 44692.64 526.66 Income minus Expenses 18379.47 18794.97 415.50 Answer :1 Comparing budgets to actual performance, Personal expenses have reduced ,mainly due to reduction in wages Operating expenses see almost compensating increases and decreases . Expenses on Insurance, cash discounts & interest have decreased, with simultaneous increase in bad debts, maintenance& repairs & advertising expenses. On the other hand, income has reduced mainly due to more reduction in sales revenue , despite increase in interest income. Overall, reduction in expenses has been over-shadowed by decreased sales revenue. Answer :2 From the above, it is evident that more realistic projection about sales revenues are required while drawing up estimates for 2017 More allocation can be given to cash discounts to boost sales. Bad debts, maintenance& repairs & advertising expenses are to be allotted more amounts in 2017 budget.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.