Answer both questions 1 and 2.if answered within 45mins,it would be appreciable!!! PART III - FIXED & FLEXIBLE BUDGETS; VARIANCE ANALYSIS (chapters 22 & 23 review)Front Range Furniture is preparing a Cash Budget for the second quarter of the coming year.Management would like to give you additional exposure to budgeting during your internshipand has assigned you the task of preparing this Cash Budget. You will present this to youraccounting supervisor for review.The following data has been forecasted:AprilMaySales$150,000 $157,000Merchandise Purchases107,000112,400Operating ExpensesPayrollAdvertising13,6005,40014,2805,700Rent2,5007,5002,500Depreciation7,500End of April balancesBank loan payable26,000Additional data:A. Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% inthe month following the sale and 50% in the month thereafter. Total sales in Marchwere $125,000.B. Purchases are all on credit, with 40% paid in the month of purchase; the balance ispaid in the following month.C. Operating expenses are paid in the month they are incurred.D. A minimum cash balance of $25,000 is required at the end of each month.E. Loans are used to maintain the minimum cash balance. At the end of each month;interest of 1% per month is paid on the outstanding loan balance as of the beginningof the month. Repayments are made whenever excess cash is available.Required:1. Prepare the company's cash budget for May on the next page. Show the ending loanbalance at May 1.After accurate completion of the Cash Budget for the month of May, your supervisor wants tosee how much you remember about Flexible Budgets and Variance Analysis from yourintroductory accounting principles course. Management of Front Range Furniture wants tobegin using flexible budgets in the hopes of better planning for future operations. Your next task assigned is to create a flexible budget from the information below with a basic varianceanalysis. This will require review and approval before sending on to the company controller.Front Range Furniture provides the following Fixed Budget data for the year:Sales (20,000 units; $31.50 per unit)Cost of sale:$630,000Direct materials$210,000Direct labor168,00063,000Variable overheadFixed overhead500,000$130,00080,000Gross ProfitOperating expense:Fixed$12,000Variable62,000$78,00040,000Income from operationsThe company's actual activity for the year follows:Sales (21,000 units)$651,000Cost of goods sold:Direct materials$231,000Direct labor168,000Variable overhead73,50077,500Fixed overhead550,000$101,000Gross ProfitOperating expense:Fixed$12,000Variable51,5009,50039,500Income frooperationsRequired:2. Prepare a flexible budget performance report for the year using the contribution marginformat on the appropriate tab of your working papers. You will be "flexing" the budgetto a sales level of 21,000. Be sure to complete all columns provided. Be sure to answerthe questions below the chart in your working papers.

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Front Range Furniture is preparing a Cash Budget for the second quarter of the coming year. Management would like to give you additional exposure to budgeting during your internship and has assigned you the task of preparing this Cash Budget. You will present this to your accounting supervisor for review. The following data has been forecasted: April May Sales $150,000 $157,000 Merchandise Purchases 107,000 112,400 Operating Expenses Payroll Advertising 13,600 14,280 5,400 5,700 Rent Depreciation 2,500 2,500 7,500 7,500 End of April balances Bank loan payable 26,000 Additional data: A. Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. B. Purchases are all on credit, with 40% paid in the month of purchase; the balance is paid in the following month. C. Operating expenses are paid in the month they are incurred. D. A minimum cash balance of $25,000 is required at the end of each month. E. Loans are used to maintain the minimum cash balance. At the end of each month; interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made whenever excess cash is available. Required: 1. Prepare the company's cash budget for May on the next page. Show the ending loan balance at May 1.

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4PA: Budgeted income statement and supporting budgets for three months Bellaire Inc. gathered the...