The Mobile Phone Shop Actual-to-Budget Comparison For the month ended May 31, 2021 Actual Budget Budget Variance Repairs processed during the month 3,653 2,500 500 F Variable Costs: Cell phone testing equipment 7,375 $ 9,430 $ (2,055) U Cell phone repair parts 18,220 16,500 1,720 U Direct labor for repair technicians 22,785 25,900 (3,115) U Shipment costs to return repairs to customers 4,790 5,650 (860) F Total variable costs 53,170 57,480 (4,310) U Fixed Costs: Store manager and supervisor salaries 25,000 27,900 $ (2,900) F Depreciation expense on store fixtures 5,850 5,450 400 U Store lease and rental expense 28,490 26,000 2,490 U Utilities, telephone and internet expense 845 700 145 U Total fixed costs 60,185 60,050 135 U Total Expenses $113,355 $117,530 $ (4,175) U Required: a) Prepare an updated monthly report for May, showing the results with a flexible budget. Be sure to indicate whether your variances are Favourable or Unfavourable. You do not need revenues in order to complete this question. b) Based on your flexible budget results, which five (5) variances should be investigated further. Why? Support your decision with an explanation.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Mobile Phone Shop
Actual-to-Budget Comparison
For the month ended May 31, 2021
|
Actual |
Budget |
|
||
|
Repairs processed during the month |
3,653 |
2,500 |
500 F |
|
Variable Costs: |
|
|
|
|
Cell phone testing equipment |
7,375 $ |
9,430 $ |
(2,055) U |
|
Cell phone repair parts |
18,220 |
16,500 |
1,720 U |
|
Direct labor for repair technicians |
22,785 |
25,900 |
(3,115) U |
|
Shipment costs to return repairs to customers |
4,790 |
5,650 |
(860) F |
|
Total variable costs |
53,170 |
57,480 |
(4,310) U |
|
Fixed Costs: |
|
|
|
|
Store manager and supervisor salaries |
25,000 |
27,900 $ |
(2,900) F |
|
|
5,850 |
5,450 |
400 U |
|
Store lease and rental expense |
28,490 |
26,000 |
2,490 U |
|
Utilities, telephone and internet expense |
845 |
700 |
145 U |
|
Total fixed costs |
60,185 |
60,050 |
135 U |
|
Total Expenses |
$113,355 |
$117,530 |
$ (4,175) U |
Required:
a) Prepare an updated monthly report for May, showing the results with a flexible budget. Be sure to indicate whether your variances are Favourable or Unfavourable. You do not need revenues in order to complete this question.
b) Based on your flexible budget results, which five (5) variances should be investigated further. Why? Support your decision with an explanation.
Step by step
Solved in 2 steps
