Reference no: EM132617835
Imagine you are a Finance manager of ABC Pty Ltd. and you have successfully prepared and implemented the required budget for your organization. You need to examine how you can review the management of the budget by examining the actual expenditure with the budgeted amounts and identifying and prioritizing significant issues. Below is the extract of the income statement of your organization showing budgeted and actual figures
Quarter 1-Actual Budgeted
Revenue
Sales $91,675.00 $92,000.00
Sales Returns 410.00 400.00
Sales Discounts 3,500.00 3,600.00
Net Sales $95,585.00 $96,000.00
Cost of Goods Sold 70,000.00 70,500.00
Gross Profit $25,585.00 $25,500.00
Operating Expenses
Salaries & Wages $10,500.00 $10,500.00
Depreciation Expenses 415.00 415.00
Office Expenses 395.00 400.00
Rent Expense 950.00 950.00
Travel Expenses 625.00 600.00
Maintenance Expenses 125.00 150.00
Advertising Expenses 550.00 400.00
Total Operating Expenses $13,560.00 $13,415.00
Income From Operations $12,025.00 $12,085.00
Interest (Expense) (85.00) (85.00)
Income Before Income Taxes $11,940.00 $12,000.00
Income Tax Expense 625.00 650.00
Net Income $11,315.00 $11,350.00
Problem 1: Compare the actual and budgeted data, identify the variances in $ and in % and highlight favorable and unfavorable variance.
Problem 2: Identify which areas company need to work on improving in the next budget after ranking the variances.
Problem 3: Describe corrective actions and its types and give suggestions as which type of corrective actions are good for your company.
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