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Here is partially completed comparative balance sheet for Snow Cones Company for the year ended December 31, 20X2.

SNOW CONES COMPANY - Comparative Balance Sheets

20X2 20X2 Percentage
Assets Actual Budgeted Variance Variance

Cash \$7,500 \$7,800 (a) (3.85%)
Accounts Recievable 9,200 9,000 200 2.22%
Inventory 1,000 720 280 (b)
_______ _______ ______ _______

Current Assets \$17,700 \$17,520 \$ 180 1.03%

Equipment (net) (c) 11,000 1,000 9.09%

Total Assets:
\$29,700 (d) 1,180 4.14%
_______ ________ ______ _______

Liabilities&Owners'Equity

Accounts Payable \$3,000 \$2,500 \$500 20.00%
_______ ________ ______ _______

Long-term Note Payable 1,000 (e) (1,000) (50.00%)

Common Stock 20,000 17,000 3,000 17.65%
Retained Earnings 5,700 7,020 (1,320) (g)
_______ ________ ______ _______

Total Liabilities&Owners'Eq:

\$29,000 (f) \$1,180 4.14%

___________________________________________________________

Compute the following missing amounts :

a) Cash variance (in dollars)
b) Inventory percentage variance
c) 20X2 actual equipment (net) balance
d) 20X2 budgeted total assets
e) 20X2 budgeted long-term note payable
f) 20X2 budgeted total liabilities and owner's equity
g) 20X2 retained earnings percentage variance

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Glenn Martin is the owner of the GM Car Wash. The company sells car washes for \$10. The variable cost (water, soap, and labor) per wash is \$4. The company incurs \$100,000 of fixed costs per year. The company expects to deliver 25,000 washes in the coming year :

a) Based on these data, prepare a static budget for the coming year.
b) How wouls net income differ if 15,000 washes were delivered ?
c) How would net income differ if 30,000 washes were delivered ?

Speedy Sandwich Shoppe delivers box lunches to busy executives in a major metropolitan area. Speedy has prepared the following projections for its business for June 20X2 :

Budgeted number of meals : 10,000
Budgeted average price per meal : \$12
Budget variable costs per meal : \$5
Budgeted annual fixed costs : \$50,000

a) Compute budgeted contribution margin
b) Compute budgeted net income.
c) Prepare a flexible budget for sales of 8,000; 12,000; and 15,000 box lunches. d) How does net income change from the static budget ?

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Professional Uniform Company sells uniforms to various food service companies. Here are the actual and budgeted results for a recent year :

Actual number of uniforms sold : 10,000
Budgeted number of uniforms to be sold : 11,000
Actual average variable cost per uniform : \$20
Budgeted average variable cost per uniform : \$18

Compute the following :

a) Total variable cost variance
b) Variable cost price variance
c) Variable cost volume variance

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Solution Preview

Here is partially completed comparative balance sheet for Snow Cones Company for the year ended December 31, 20X2.

SNOW CONES COMPANY - Comparative Balance Sheets

20X2 20X2 Percentage
Assets Actual Budgeted Variance Variance

Cash \$7,500 \$7,800 (a) (3.85%)
Accounts Recievable 9,200 9,000 200 2.22%
Inventory 1,000 720 280 (b)
_______ _______ ______ _______

Current Assets \$17,700 \$17,520 \$ 180 1.03%

Equipment (net) (c) \$11,000 1,000 9.09%

Total Assets: \$29,700 (d) 1,180 4.14%
_______ ________ ______ _______

Liabilities&Owners'Equity

Accounts Payable \$3,000 \$2,500 \$500 20.00%
_______ ________ ______ _______

Long-term Note Payable \$1,000 (e) (1,000) (50.00%)

Common Stock \$20,000 \$17,000 \$3,000 17.65%
Retained Earnings \$5,700 \$7,020 (1,320) (g)
_______ ________ ______ _______

Total Liabilities&Owners'Eq: \$29,000 (f) \$1,180 4.14%

___________________________________________________________

Compute the following missing amounts :

a) Cash variance (in dollars)

Actual - Budgeted = variance
7,500 - 7,800 = (300)

b) Inventory percentage variance

Percentage variance = Variance/Budgeted
= 280/720
= 38.88%

c) 20X2 actual equipment (net) balance

Actual - Budgeted = ...

Solution Summary

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