Planning and actual budgets for the month ended December 31st, 2020 PLANNING ACTUAL Budgeted meals quantity (q) 20 000 18 000 Revenues (£5.00q) £100 000 £90 000 Expenses: Raw material (£2.50q) 50 000 45 000 Wages and salaries (£5 500+£0.25q) Utilities (£2 500 + £0.05q) Facility rent 10 500 10 000 3 500 3 400 5 000 5 500 Insurance 2 800 3 200 Fuel 2 500 2 800 Net Operating Income £25 700 £20 100 Required: a) Outline the objectives of budgeting and explain how London Docks Café benefits from engaging in robust budgetary processes? b) Prepare a report showing London Docks Cafe's revenue and spending variance for December? c) Based on the variances report you prepared in (b) above, which area/s of activity should be of concern to the management of London Docks Café? Explain d) Explain the terms profitability and sustainability. Assess and advise the London Docks Café on the measures they should adopt to ensure the attainment of both mandates.
Planning and actual budgets for the month ended December 31st, 2020 PLANNING ACTUAL Budgeted meals quantity (q) 20 000 18 000 Revenues (£5.00q) £100 000 £90 000 Expenses: Raw material (£2.50q) 50 000 45 000 Wages and salaries (£5 500+£0.25q) Utilities (£2 500 + £0.05q) Facility rent 10 500 10 000 3 500 3 400 5 000 5 500 Insurance 2 800 3 200 Fuel 2 500 2 800 Net Operating Income £25 700 £20 100 Required: a) Outline the objectives of budgeting and explain how London Docks Café benefits from engaging in robust budgetary processes? b) Prepare a report showing London Docks Cafe's revenue and spending variance for December? c) Based on the variances report you prepared in (b) above, which area/s of activity should be of concern to the management of London Docks Café? Explain d) Explain the terms profitability and sustainability. Assess and advise the London Docks Café on the measures they should adopt to ensure the attainment of both mandates.
Chapter8: Budgets And Bank Reconciliations
Section: Chapter Questions
Problem 3.3C
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Question
Transcribed Image Text:Planning and actual budgets for the month ended December 31st, 2020
PLANNING
ACTUAL
Budgeted meals quantity
(q)
20 000
18 000
Revenues (£5.00q)
£100 000
£90 000
Expenses:
Raw material (£2.50q)
50 000
45 000
10 000
Wages and salaries (£5 500+£0.25q)
Utilities (£2 500 + £0.05q)
Facility rent
10 500
3 500
3 400
5 000
5 500
Insurance
2 800
3 200
Fuel
2 500
2 800
Net Operating Income
£25 700
£20 100
Required:
a) Outline the objectives of budgeting and explain how London Docks
Café benefits from engaging in robust budgetary processes?
b) Prepare a report showing London Docks Cafe's revenue and
spending variance for December?
c) Based on the variances report you prepared in (b) above, which
area/s of activity should be of concern to the management of
London Docks Café? Explain
d) Explain the terms profitability and sustainability. Assess and
advise the London Docks Café on the measures they should
adopt to ensure the attainment of both mandates.
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