3. Purchases budget Current Next year year December January February March 1st quarter Budgeted cost of goods sold Add Desired ending inventory Total goods needed Less Expected beginning inventory Purchases 4. Cash payments budget Cash payments budget January February March 1st quarter Inventory purchases Cash payments for purchases during the current month* Cash payments for purchases during the preceding month* Total cash payments for inventory purchases Other expenses Sales salaries Advertising and promotion Administrative salaries Interest on long-term loan Property taxes Sales commissions Total cash payments for other expenses Total cash payments * 40% of the current month's purchases (schedule 3). † 60% of the preceding month's purchases (schedule 3). * Long-term loan interest is paid every six months, on 31 January and 31 July. Property taxes are also paid every six months, on 28 February and 31 August.
3. Purchases budget Current Next year year December January February March 1st quarter Budgeted cost of goods sold Add Desired ending inventory Total goods needed Less Expected beginning inventory Purchases 4. Cash payments budget Cash payments budget January February March 1st quarter Inventory purchases Cash payments for purchases during the current month* Cash payments for purchases during the preceding month* Total cash payments for inventory purchases Other expenses Sales salaries Advertising and promotion Administrative salaries Interest on long-term loan Property taxes Sales commissions Total cash payments for other expenses Total cash payments * 40% of the current month's purchases (schedule 3). † 60% of the preceding month's purchases (schedule 3). * Long-term loan interest is paid every six months, on 31 January and 31 July. Property taxes are also paid every six months, on 28 February and 31 August.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:3. Purchases budget
Current
Next year
year
December
January
February
March
1st quarter
Budgeted cost of goods
sold
Add Desired ending
inventory
Total goods needed
Less Expected beginning
inventory
Purchases
4. Cash payments budget
Cash payments budget
January
February
March
1st quarter
Inventory purchases
Cash payments for
purchases during the
current month*
Cash payments for
purchases during the
preceding month*
Total cash payments for
inventory purchases
Other expenses
Sales salaries
Advertising and promotion
Administrative salaries
Interest on long-term loan
Property taxes
Sales commissions
Total cash payments for
other expenses
Total cash payments
* 40% of the current month's purchases (schedule 3).
† 60% of the preceding month's purchases (schedule 3).
* Long-term loan interest is paid every six months, on 31 January and 31 July.
Property taxes are also paid every six months, on 28 February and 31 August.
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