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3. AB Fish House is a family-owned restaurant that specializes in Scandinavian-style seafood. Data concerning the restaurant's monthly revenues and costs appear below (q refers
3. AB Fish House is a family-owned restaurant that specializes in Scandinavian-style seafood. Data concerning the restaurant's monthly revenues and costs appear below (q refers to the number of meals served): Revenue Tk. 16.500 Cost of ingredients Tk. 6.254 Wages and salaries Tk. 10,400 Utilities .. Tk. 800+ Tk. 0.20 Rent .. Tk. 2,200 Miscellaneous Tk. 600 + Tk. 0.80 9 Required: (a) Prepare the restaurant's planning budget for April assuming that 1,800 meals are served. (b) Assume that 1,700 meals were actually served in April. Prepare a flexible budget for this level of activity. (c) The actual results for April appear below. Prepare a flexible budget performance report for the restaurant for April. Revenue Cost of ingredients Wages and salaries Utilities .. Rent. Miscellaneous Tk. 27,920 Tk. 11,110 Tk. 10,130 Tk. 1,080 Tk. 2,200 Tk. 2,240 4. A Company is ready to begin its third quarter, in which peak sales occur. The company has required a Tk. 40,000, 90-days loan from its bank to help meet cash requirements during the quarter. Since the company has experienced difficulty in paying off loans in the past, the loan officer at the bank has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled: (a) On July 1, the beginning of the third quarter, the company will have a cash balance of Tk. 44,500. (b) Actual sales for the last two months and budgeted sales for the third quarter as follows: May (actual) 2,50,000 June (actual) 3,00,000 July (budgeted) 4,00,000 August (budgeted) 6,00,000 September (budgeted) 3,20,000 Past experience shows that 25% of a month's sales are collected in the month of sales, 70% in the month following sales, and 3% in the second month following sales. The remainder is uncorrectable. (c) Budgeted merchandise purchases and budgeted expenses for the third quarter are given below: July August September Merchandise purchase 2,40,000 3,50,000 1,75,000 Salaries 45,000 50,000 40,000 Advertising 1,30,000 1,45,000 80,000 Rent payment 9,000 9,000 9,000 Depreciation 10,000 10,000 10,000 Merchandise purchases are paid in full during the month following purchase. Accounts payable for the merchandises on June 30, which will be paid during July, total Tk. 1,80,000. (d) Equipment costing Tk. 20,000 will be purchased for 50% cash and 50% credit during July. (e) Office furniture costing Tk. 30,000 will be purchased for credit during September. (f) In preparing the cash budget, assume that Tk. 40,000 loan will be made in July and repaid in September. Interest on the loan will total Tk. 1,200. Required: (a) Prepare a schedule of expected cash collections for July, August and September and for the quarter in total. (b) Prepare a cash budget by month and in total, for the third quarter. (c) If the company needs a minimum cash balance of Tk. 20,000 to start each month, can the loan be repaid as planned? Explain
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