Bellmore Limited is ready to begin its third quarter in which peak sales occur and will have a cash opening balance of R22 250 on 1 July. Actual sales for the last two months and budgeted sales for the quarter are as follows; May (actual) R125 000 June (actual) R150 000 July (actual) R200 000 August (budgeted) R300 000 September (budgeted) R160 000 old records shows the following: 25% of a month’s sales collected in the month of sale 70% in the month following the month of sale 3% in the second month following the month of sale The remainder is irrecoverable The budgeted material purchases and expenses for the third quarter are as follows: July August September R R R Material purchases 170 000 175 000 87 500 Salaries and wages 22 500 20 000 20 000 Advertising 45 000 35 000 40 000 Rent paid 4 500 4 500 4 500 Depreciation 5 000 5 000 5 000 Material purchases are paid in full in the month following the month of purchase. Accounts payable for material purchases on the 30 June amounts to R90 000. Equipment costing R8 000 was purchased for cash in July. REQUIRED: Prepare a cash budget per month
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.
Q1
Bellmore Limited is ready to begin its third quarter in which peak sales occur and will have a cash opening balance of R22 250 on 1 July.
Actual sales for the last two months and budgeted sales for the quarter are as follows;
| May (actual) | R125 000 | |
| June (actual) | R150 000 | |
| July (actual) | R200 000 | |
| August (budgeted) | R300 000 | |
| September (budgeted) | R160 000 |
old records shows the following:
- 25% of a month’s sales collected in the month of sale
- 70% in the month following the month of sale
- 3% in the second month following the month of sale
- The remainder is irrecoverable
The budgeted material purchases and expenses for the third quarter are as follows:
|
|
July |
August |
September |
|
|
R |
R |
R |
|
Material purchases |
170 000 |
175 000 |
87 500 |
|
Salaries and wages |
22 500 |
20 000 |
20 000 |
|
Advertising |
45 000 |
35 000 |
40 000 |
|
Rent paid |
4 500 |
4 500 |
4 500 |
|
|
5 000 |
5 000 |
5 000 |
Material purchases are paid in full in the month following the month of purchase. Accounts payable for material purchases on the 30 June amounts to R90 000. Equipment costing R8 000 was purchased for cash in July.
REQUIRED:
Prepare a
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