Reference no: EM132617835

Imagine you are a Finance manager of ABC Pty Ltd. and you have successfully prepared and implemented the required budget for your organization. You need to examine how you can review the management of the budget by examining the actual expenditure with the budgeted amounts and identifying and prioritizing significant issues. Below is the extract of the income statement of your organization showing budgeted and actual figures

Quarter                                         1-Actual                              Budgeted

Revenue

Sales                                     $91,675.00                 $92,000.00

Sales Returns                          410.00                      400.00

Sales Discounts                       3,500.00                   3,600.00

Net Sales                               $95,585.00                  $96,000.00

Cost of Goods Sold                   70,000.00                     70,500.00

Gross Profit                              $25,585.00             $25,500.00

Operating Expenses

Salaries & Wages                        $10,500.00             $10,500.00

Depreciation Expenses                   415.00                   415.00

Office Expenses                            395.00                    400.00

Rent Expense                               950.00                  950.00

Travel Expenses                             625.00                  600.00

Maintenance Expenses                   125.00                   150.00

Advertising Expenses                    550.00                        400.00

Total Operating Expenses                $13,560.00               $13,415.00

Income From Operations                  $12,025.00             $12,085.00

Interest (Expense)                             (85.00)                   (85.00)

Income Before Income Taxes                  $11,940.00         $12,000.00

Income Tax Expense                                625.00             650.00

Net Income                                         $11,315.00           $11,350.00

Problem 1: Compare the actual and budgeted data, identify the variances in $ and in % and highlight favorable and unfavorable variance.

Problem 2: Identify which areas company need to work on improving in the next budget after ranking the variances.

Problem 3: Describe corrective actions and its types and give suggestions as which type of corrective actions are good for your company.