Ciao Magazine Ltd is a small family-owned company that publishes a range of magazines aimed at women, men and children. The company’s accountant has provided the following figures from the accounting records for the month of July 2018.     Budget Actual   £ £ Revenue     Women's magazines 20,000 21,320 Men's magazines 10,000 9,545 Children's magazines 8,000 9,080 Expenditure     Cost of sales 14,000 13,495 Administrative expenses 11,000 11,548 Distribution costs 500 452 Finance costs 25 25   Required   Using the above information, prepare a budget report for Ciao Magazines Ltd that shows the budgeted and actual profit or loss for the month of July You should show all the variances, indicating whether they are favourable or adverse.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Ciao Magazine Ltd is a small family-owned company that publishes a range of magazines aimed at women, men and children. The company’s accountant has provided the following figures from the accounting records for the month of July 2018.

 

 

Budget

Actual

 

£

£

Revenue

 

 

Women's magazines

20,000

21,320

Men's magazines

10,000

9,545

Children's magazines

8,000

9,080

Expenditure

 

 

Cost of sales

14,000

13,495

Administrative expenses

11,000

11,548

Distribution costs

500

452

Finance costs

25

25

 

Required

 

  1. Using the above information, prepare a budget report for Ciao Magazines Ltd that shows the budgeted and actual profit or loss for the month of July You should show all the variances, indicating whether they are favourable or adverse.

 

  1. Interpret your budget report by commenting briefly on the overall revenue and expenditure variances and the extent to which the financial objectives for the month have been

 

 

  1. Define the term ‘budget’ and explain the purpose of a budgetary control system with reference to Ciao

 

  1. Your growing reputation as a management accountant has spread and you have been asked to write an article for the local newspaper entitled ‘What makes an effective system of budgetary control?’. Write the article in which you should critically discuss the main requirements for an effective system of budgetary control and any potential disadvantages with reference to Ciao Magazines.
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