i completed part 1 as you can see, now i am struggling with part 2 and 3 please help!!
SECTIONI PREPARATION OF A BUDGETED INCOME STATEMENT Cold Mountain Ice Cream Shoppe is an ice cream shop company that sells a franchised brand of single serve ice cream. Sales Budget The sales department of Cold Stone Creamery has determined that sales for 2020 will be 7% higher than sales in 2019. Actual 2019 sales were as follows: Month Unit sales Month Unit Sales January 2019 2,690 units July 2019 4.750 units February 2019 2,805 units August 2019 4,850 units March 2019 2,958 units September 2019 3,530 units April 2019 4.250 units October 2019 2.905 units May 2019 4,350 units November 2019 2.858 units June 2019 4,525 units December 2019 2,605 units los cust 2012019 2 9023 units 9 2.858 units The average selling price per unit in 2019 was $4.50/unit. The company expects to increase the selling price by 8% in 2020. Cost of goods sold Each unit of ice cream costs 55% of the retail price Selling and Administrative expense Cold Mountain has to pay a franchise fee equal to 2.5% of sales revenue Salaries are $1,000 / month During the peak season (June - August) Cold Mountain hires additional sales people. The additional sales people's salaries are $800 per month . During the peak season (June-August) Cold Mountain advertises. Advertising expense are $1.800 per month. Rent expense is fixed at $1,500 per month Utilities are $250 fixed plus S.05 per unit variable costs. Supplies are $500 per month in the peak season (May - August) and $250 per month in the offseason (Jan-April, Sept. - December) Depreciation on the store equipment is $250 per month Income taxes Cold Mountain's tax rate is 28% of Net Income before taxes Required: Using the spreadsheet provided on canvas, prepare a Budgeted Income Statement by month for Cold Stone Ice Cream Shoppe. Budgeted Income Statement Mar Apr May Unit Sales Units 2019 actual Units 2020 budget 2,690 2,878 2,805 3,001 2,958 3,165 4,250 4,548 4,350 4,655 4,525 4,842 4,750 5,083 $ Sales Cost of goods sold Gross Profit 13,989 S 7,694 $ 6,295 $ 14,587 $ 8,023 $ 6,564 $ 15,382 $ 8,460 $ 6,922 $ 22,101 $ 12,155 $ 9,945 $ 22,621 S 12,441 $ 10,179 $ 23,531 5 12,942 $ 10,589 $ 24,701 13,586 11,115 385 $ 1,000 $ 566 $ 1,000 $ - $ Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 350 $ 1,000 $ - $ 1,500 $ 394 S 250 $ 250 $ 3,744 S 365 $ 1,000 $ - $ 1,500 $ 400 $ 250 $ 250 $ 3,765 $ 1,500 $ 408 $ 250 $ 250 $ 3,793 $ 553 $ 1,000 $ $ 1,500 $ 477 $ 250 $ 250 $ 4,030 $ 1,500 $ 483 $ 500 $ 250 $ 4,298 $ 588 $ 1,800 $ 1,800 $ 1,500 $ 492 $ 500 $ 250 $ 6,930 $ 618 1,800 1,800 1,500 504 500 250 6,972 Income before taxes Income tax expense 2,551 $ 714 $ 2,799 $ 784 $ 3,129 876 $ $ 5,915 $ 1,656 $ 5,881 $ 1,647 $ 3,659 $ 1,024 $ 4,144 1,160 Net income $ 1,837 $ 2,015 $ 2,253 $ 4,259 $ 4,234 $ 2,634 $ 2,984 Budgeted Income Statement Aug Sept Oct Nov Dec Total Unit Sales Units 2019 actual Units 2020 budget 4,850 5,190 3,530 3,777 2,905 3,108 2,858 3,058 2,605 2,787 43,076 46,091 Sales Cost of goods sold Gross Profit $ $ 25,221 $ 13,872 $ 11,349 $ 18,357 $ 10,096 $ 8,261 $ 15,107 8,309 6,798 5 $ $ 14,862 5 8,174 $ ,688 5 13,547 $ 7,451 $ ,096 $ 224,004 123,202 100,802 6 6 459 $ 1,000 $ $ Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 631 $ 1,800 $ 1,800 $ 1,500 $ 509 $ 500 $ 250 $ 6,990 $ 1,500 $ 439 $ 250 $ 250 $ 3,898 $ 378 $ 1,000 $ - $ 1,500 $ 405 $ 250 $ 250 $ 3,783 $ 372 $ 1,000 $ - S 1,500 $ 403 $ 250 $ 250 $ 3,774 $ 339 $ 1,000 $ - $ 1,500 $ 389 $ 250 $ 250 $ 3,728 $ 5,600 14,400 5,400 18,000 5,305 4,000 3,000 55,705 Income before taxes Income tax expense 4,359 $ 1,221 $ 4,363 $ 1,222 $ 3,015 $ 844 $ 2,914 816 $ $ 2,368 $ 663 $ 45,097 12,627 Net income $ 3,139 $ 3,141 $ 2,171 $ 2,098 $ 1,705 $ 32,470 SECTION II PREPARATION OF A MERCHANDISE PURCHASE AND CASH BUDGET A. MERCHANDISE PURCHASE BUDGET + - - Budgeted ending inventory Budgeted units sold Budgeted beginning inventory Inventory (units) to be purchased Beginning inventory on hand on January 1, 2020 is 2,100 units. Cold Mountain maintains an ending inventory equal to 70% of the next month's budgeted sales. Cold Mountain estimates January 2021 sales to be 2,100 units. Required: Prepare a Merchandise Purchase Budget for Cold Mountain Ice Cream Shoppe B. CASH BUDGET Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursement - Budgeted ending cash balance Beginning cash balance on January 1, 2020 is $150,000. Assume 75% of sales are paid for in cash and 25% are paid with Cold Mountain credit cards. Credit cards are paid the following month. Beginning accounts receivable balance on January 2020 is $2,280. Cold Mountain purchases its inventory entirely on account. Full payment is made the month following the purchase. Accounts payable balance as of January 1, 2020 is $5,470. Franchise fees are paid the month following the sales (for example franchise fees for January are paid in February). Franchise fee expense for December 2019 was $250. Salaries, Rent Utilities and Supplies expenses are paid for during the month in which they are incurred. Advertising expense is paid for in advance the month prior to the advertising campaign Taxes are paid the following year (in April). Prior year taxes were $31,500. Required: Using the spreadsheet provided on canvas, prepare a Cash Budget for Cold Mountain Ice Cream Shoppe Cold Moutain Ice Cream Shoppe Merchandise Purchase Budget Jun Jul Mar Next month's sales (units) Ending inventory percentage Budgeted ending inventory Add current month's sales Total units needed Less beginning inventory Number of units to be purchased Budgeted cost per unit Budgeted cost to purchase SECTION III BUDGET ANALYSIS Once the budget is complete, the actual results are compared against the budget. Included in the chart are the actual results for the year. Cold Mountain uses a flex budget to assess activity and revenue and spending variances. 1. Using the spreadsheet on Canvas, to complete the Variance Report 2. Using the eBook and powerpoint, analyze the results and answer the following questions for each of the 3 variances (1) Activity variance (2) Revenue variance and (3) Spending Variance a) Using the eBook define each variance b) What causes this variance (be specific) c) Who is responsible for this variance (job title) d) Is the variance favorable or unfavorable (for some it may be both) (be specifie) Unit Sales Selling price per unit Actual 48,510 5.00 Sales Cost of goods sold Gross Profit 242,550 138,254 104,297 Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 6,064 13,500 5,000 18,600 6,230 3,950 3,000 56,344 $ Operating Income Income tax expense 47,953 7,776 Net income 40.177 Cold Moutain Ice Cream Shopp Cash Budget Jan Feb Mar Apr Beginning Cash Budgeted cash receipts Cash sales Collection of receivables Total cash receipts Budgeted cash disbursements Cash paid for accounts payable Franchise fee 7 Sales salaries Advertising expense 9 Rent expense 0 Utilities expense Supplies 2 Income tax expense Total cash disbursements es Ending cash balance income statement purchase budget cash budget flex budget SECTIONI PREPARATION OF A BUDGETED INCOME STATEMENT Cold Mountain Ice Cream Shoppe is an ice cream shop company that sells a franchised brand of single serve ice cream. Sales Budget The sales department of Cold Stone Creamery has determined that sales for 2020 will be 7% higher than sales in 2019. Actual 2019 sales were as follows: Month Unit sales Month Unit Sales January 2019 2,690 units July 2019 4.750 units February 2019 2,805 units August 2019 4,850 units March 2019 2,958 units September 2019 3,530 units April 2019 4.250 units October 2019 2.905 units May 2019 4,350 units November 2019 2.858 units June 2019 4,525 units December 2019 2,605 units los cust 2012019 2 9023 units 9 2.858 units The average selling price per unit in 2019 was $4.50/unit. The company expects to increase the selling price by 8% in 2020. Cost of goods sold Each unit of ice cream costs 55% of the retail price Selling and Administrative expense Cold Mountain has to pay a franchise fee equal to 2.5% of sales revenue Salaries are $1,000 / month During the peak season (June - August) Cold Mountain hires additional sales people. The additional sales people's salaries are $800 per month . During the peak season (June-August) Cold Mountain advertises. Advertising expense are $1.800 per month. Rent expense is fixed at $1,500 per month Utilities are $250 fixed plus S.05 per unit variable costs. Supplies are $500 per month in the peak season (May - August) and $250 per month in the offseason (Jan-April, Sept. - December) Depreciation on the store equipment is $250 per month Income taxes Cold Mountain's tax rate is 28% of Net Income before taxes Required: Using the spreadsheet provided on canvas, prepare a Budgeted Income Statement by month for Cold Stone Ice Cream Shoppe. Budgeted Income Statement Mar Apr May Unit Sales Units 2019 actual Units 2020 budget 2,690 2,878 2,805 3,001 2,958 3,165 4,250 4,548 4,350 4,655 4,525 4,842 4,750 5,083 $ Sales Cost of goods sold Gross Profit 13,989 S 7,694 $ 6,295 $ 14,587 $ 8,023 $ 6,564 $ 15,382 $ 8,460 $ 6,922 $ 22,101 $ 12,155 $ 9,945 $ 22,621 S 12,441 $ 10,179 $ 23,531 5 12,942 $ 10,589 $ 24,701 13,586 11,115 385 $ 1,000 $ 566 $ 1,000 $ - $ Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 350 $ 1,000 $ - $ 1,500 $ 394 S 250 $ 250 $ 3,744 S 365 $ 1,000 $ - $ 1,500 $ 400 $ 250 $ 250 $ 3,765 $ 1,500 $ 408 $ 250 $ 250 $ 3,793 $ 553 $ 1,000 $ $ 1,500 $ 477 $ 250 $ 250 $ 4,030 $ 1,500 $ 483 $ 500 $ 250 $ 4,298 $ 588 $ 1,800 $ 1,800 $ 1,500 $ 492 $ 500 $ 250 $ 6,930 $ 618 1,800 1,800 1,500 504 500 250 6,972 Income before taxes Income tax expense 2,551 $ 714 $ 2,799 $ 784 $ 3,129 876 $ $ 5,915 $ 1,656 $ 5,881 $ 1,647 $ 3,659 $ 1,024 $ 4,144 1,160 Net income $ 1,837 $ 2,015 $ 2,253 $ 4,259 $ 4,234 $ 2,634 $ 2,984 Budgeted Income Statement Aug Sept Oct Nov Dec Total Unit Sales Units 2019 actual Units 2020 budget 4,850 5,190 3,530 3,777 2,905 3,108 2,858 3,058 2,605 2,787 43,076 46,091 Sales Cost of goods sold Gross Profit $ $ 25,221 $ 13,872 $ 11,349 $ 18,357 $ 10,096 $ 8,261 $ 15,107 8,309 6,798 5 $ $ 14,862 5 8,174 $ ,688 5 13,547 $ 7,451 $ ,096 $ 224,004 123,202 100,802 6 6 459 $ 1,000 $ $ Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 631 $ 1,800 $ 1,800 $ 1,500 $ 509 $ 500 $ 250 $ 6,990 $ 1,500 $ 439 $ 250 $ 250 $ 3,898 $ 378 $ 1,000 $ - $ 1,500 $ 405 $ 250 $ 250 $ 3,783 $ 372 $ 1,000 $ - S 1,500 $ 403 $ 250 $ 250 $ 3,774 $ 339 $ 1,000 $ - $ 1,500 $ 389 $ 250 $ 250 $ 3,728 $ 5,600 14,400 5,400 18,000 5,305 4,000 3,000 55,705 Income before taxes Income tax expense 4,359 $ 1,221 $ 4,363 $ 1,222 $ 3,015 $ 844 $ 2,914 816 $ $ 2,368 $ 663 $ 45,097 12,627 Net income $ 3,139 $ 3,141 $ 2,171 $ 2,098 $ 1,705 $ 32,470 SECTION II PREPARATION OF A MERCHANDISE PURCHASE AND CASH BUDGET A. MERCHANDISE PURCHASE BUDGET + - - Budgeted ending inventory Budgeted units sold Budgeted beginning inventory Inventory (units) to be purchased Beginning inventory on hand on January 1, 2020 is 2,100 units. Cold Mountain maintains an ending inventory equal to 70% of the next month's budgeted sales. Cold Mountain estimates January 2021 sales to be 2,100 units. Required: Prepare a Merchandise Purchase Budget for Cold Mountain Ice Cream Shoppe B. CASH BUDGET Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursement - Budgeted ending cash balance Beginning cash balance on January 1, 2020 is $150,000. Assume 75% of sales are paid for in cash and 25% are paid with Cold Mountain credit cards. Credit cards are paid the following month. Beginning accounts receivable balance on January 2020 is $2,280. Cold Mountain purchases its inventory entirely on account. Full payment is made the month following the purchase. Accounts payable balance as of January 1, 2020 is $5,470. Franchise fees are paid the month following the sales (for example franchise fees for January are paid in February). Franchise fee expense for December 2019 was $250. Salaries, Rent Utilities and Supplies expenses are paid for during the month in which they are incurred. Advertising expense is paid for in advance the month prior to the advertising campaign Taxes are paid the following year (in April). Prior year taxes were $31,500. Required: Using the spreadsheet provided on canvas, prepare a Cash Budget for Cold Mountain Ice Cream Shoppe Cold Moutain Ice Cream Shoppe Merchandise Purchase Budget Jun Jul Mar Next month's sales (units) Ending inventory percentage Budgeted ending inventory Add current month's sales Total units needed Less beginning inventory Number of units to be purchased Budgeted cost per unit Budgeted cost to purchase SECTION III BUDGET ANALYSIS Once the budget is complete, the actual results are compared against the budget. Included in the chart are the actual results for the year. Cold Mountain uses a flex budget to assess activity and revenue and spending variances. 1. Using the spreadsheet on Canvas, to complete the Variance Report 2. Using the eBook and powerpoint, analyze the results and answer the following questions for each of the 3 variances (1) Activity variance (2) Revenue variance and (3) Spending Variance a) Using the eBook define each variance b) What causes this variance (be specific) c) Who is responsible for this variance (job title) d) Is the variance favorable or unfavorable (for some it may be both) (be specifie) Unit Sales Selling price per unit Actual 48,510 5.00 Sales Cost of goods sold Gross Profit 242,550 138,254 104,297 Selling & Administrative Franchise fee Sales salaries Advertising expense Rent expense Utilities expense Supplies Depreciation expense Total Selling & Administrative 6,064 13,500 5,000 18,600 6,230 3,950 3,000 56,344 $ Operating Income Income tax expense 47,953 7,776 Net income 40.177 Cold Moutain Ice Cream Shopp Cash Budget Jan Feb Mar Apr Beginning Cash Budgeted cash receipts Cash sales Collection of receivables Total cash receipts Budgeted cash disbursements Cash paid for accounts payable Franchise fee 7 Sales salaries Advertising expense 9 Rent expense 0 Utilities expense Supplies 2 Income tax expense Total cash disbursements es Ending cash balance income statement purchase budget cash budget flex budget
