A cash budget is prepared for a retail company. The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts (Note: Omit 000's in your answers). Quarter 1 3 3 4 Year Cash Balance, Beginning $ 6 Add: Collections from Customers 93 322 Total Cash Available before current financing 66 Deduct Disbursements: Purchase of Inventory 36 46 35 Operating Expenses 33 31 114 Equipment Purchases 10 10 11 35 Dividends 2 2 2 2 Total Disbursements 91 Excess (deficiency) of cash available over disbursements (2) 13 Financing Borrowings 14 Repayments (including interest)* (14) Total Financing Cash Balance, Ending *Interest Will Total $1000 for the year
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.
A
Quarter
| 1 | 3 | 3 | 4 | Year | |
| Cash Balance, Beginning | $ 6 | ||||
| Add: Collections from Customers | 93 | 322 | |||
| Total Cash Available before current financing | 66 | ||||
| Deduct Disbursements: | |||||
| Purchase of Inventory | 36 | 46 | 35 | ||
| Operating Expenses | 33 | 31 | 114 | ||
| Equipment Purchases | 10 | 10 | 11 | 35 | |
| Dividends | 2 | 2 | 2 | 2 | |
| Total Disbursements | 91 | ||||
| Excess (deficiency) of cash available over disbursements | (2) | 13 | |||
| Financing | |||||
| Borrowings | 14 | ||||
| Repayments (including interest)* | (14) | ||||
|
Total Financing |
|||||
| Cash Balance, Ending | |||||
| *Interest Will Total $1000 for the year | |||||
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