Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:1st Quarter 2nd Quarter 3rd Quarter 4th QuarterTotal cash receipts .............................. $180,000 $330,000 $210,000 $230,000Total cash disbursements .................... $260,000 $230,000 $220,000 $240,000The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requiresa minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterlyinterest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repayits loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at thetime it is repaid. For simplicity, assume that interest is not compounded.Required:Prepare the company’s cash budget for the upcoming fiscal 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.
Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total cash receipts .............................. $180,000 $330,000 $210,000 $230,000
Total cash disbursements .................... $260,000 $230,000 $220,000 $240,000
The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requires
a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly
interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay
its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the
time it is repaid. For simplicity, assume that interest is not compounded.
Required:
Prepare the company’s
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
