Problem
I. The company of Jam Slippers Limited operates in a very price-competitive market. The Manager has asked your company to examine the business accounting activities for the financial year 2021. His accountant, John Major, was unclear in explaining the actual figures compared to what was budgeted. Be mindful that the general inflation is running at 5%, and administrative expenses are charged at 10% of sales.
i. Calculate the variance percentage between the actual and the budget line items
ii. Explain the variance for each line item that occurred, whether a favourable or unfavourable result and the possible reason (s)
iii. Develop an income statement showing if a (profit/loss) was made from the actual figures.
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|
2021 ACTUAL
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2021 BUDGETED
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|
Number of pairs of slippers
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$ 20,400
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$ 22,500
|
|
Average price per slipper
|
5,000.00
|
5,500.00
|
|
Revenue
|
102,000,000
|
126,750,000
|
|
Material Cost
|
42,840,000
|
38,235,000
|
|
Labour Cost
|
28,705,200
|
27,682,200
|
|
Rent
|
3,600,000
|
3,200,000
|
|
Utilities
|
4,500,000
|
5,200,000
|
|
Administrative Costs
|
1,440,000
|
1,540,800
|
|
Marketing Costs
|
700,000
|
620,000
|
|
Administrative expenses
|
10,200,000
|
12,675,000
|
II. Alexandre Adams is the owner and accountant at Dennis Enterprise Ltd, which sells computer gadgets. The business is located at Shop 11, Main Street, Lucea P.O., Hanover.
During August 2022, the following transactions took place:
August Balance: cash in hand $ 1 000
1. Cash at bank $15 000
2 Paid rent in cash $ 1 500
3 Cleaning supplies paid in cash $ 120
5 Cash purchases paid by cheque $11 200
5 Cash Sales banked immediately $28 000
18 Salaries paid in cash $ 2 000
18 Drawings by cheque $ 4 000
20 Advertising expenses paid by cash $ 1 600
21 Cash sales $10450
21 Bank loan paid $14500
25 Received cash from credit customer: C. Johnson $ 4 500
28 Paid cash into bank $ 5 400
30 Purchased equipment paying by cheque $20 000
Task:
i. Record the following in a two-column cash book for August 2022.
ii. Prepare the invoice using Microsoft Excel for C. Johnson with the following items: Tablet: $4000 and Phone Case: $500