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Answered Same Day Apr 23, 2020 SITXFIN004 Training.Gov.Au


Aarti J answered on Apr 25 2020
157 Votes
Answer 1
    A        Budget    Actual    Variance    Fav / Unfav
        Cash fees    24000    32000    -8000    Fav
        Collection from debtors    12000    14500    -2500    Fav
        Loan from ABC finance company    5000        5000
        GST collected    2400    3200    -800    Unfav
        Wages    6000    6500    -500    Unfav
        Insurance    800    840    -40    Unfav
        Suppliers    14000    16400    -2400    Unfav
        Postage and telephone    400    380    20    Fav
        Purchase of new equipment    5000    4000    1000    Fav
        Cleaning of shop    1200    1200    0
        Drawings    4500    3800    700    Fav
        GST paid    2140    2342    -202    Unfav
    B    Predicted cash balance
        Total collection    43400
        Less: Total payments    34040
        Add: Beginning balance of cash    500
        Predicted cash balance    9860
    C    Actual cash balance
        Total collection    49700
        Less: Total payments    35462
        Add: Beginning balance of cash    500
        Actual cash balance    14738
    D    One of the major reasons for the variance is that the actual cash fees was more than the budgeted cash fees.The variance was around $8000. Apart from that the company also had higher collection from the debtors. One of the variances for the payments included supplier payments.
    E    Yes, quarterly period is appropriate for the making the cash budget as it will help in analyzing and managing the cash more adequately
        Part 2:
        The possible causes for the variance:
        Though the variance report of the cash budget is favorable, some of the reasons for the variances are:
        There must be higher sales than expected which resulted in the higher cash collection and cash fees, apart from that as the company had cash, the company planned not to take a loan. The payments particularly the suppliers and wages increased as the expected sales of the company...

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