Please answer the following questions using the Excel format shown. I only need the REASONS for the variances for the last 3 questions (CGS, Sales Revenue, and Advertising Expense).

This is the supporting information:

Thank you in advance!

E 1 c Dollar amount For U F D Possible reason H Dollar Ar For U Yes/Ho INCORREC CORRECT F INCORREC CORRECT F F INCORREC CORRECT INCORRECT INCORRECT F INCORRECCORRECT 1 Answer the following questions (dollar amount; For U?; Reason, when asked) 2 What is the flex budget variance for operating income? 4 What is the volume variance for operating income? 5 What do the flex budget variance and volume variance for operating income sum to? 7 Does this equal the total master budget variance Yes or No? 8 Should it always sum (or not) to the total master budget variance, even if one is U and one is F? Yes or No? 10 How much of the master budget variance for Sales was caused by an MAITION:HTED increase in volume? 11 12 How much of the master budget variance for Commission Expense was caused by an MUITION:HTED increase in volume? 13 14 How much of the master budget variance for Advertising Expense was caused by an M/TION:HTED increase in volume? 15 16 How much of the master budget variance for CGS was caused by some factor OTHER THWW volume? What could account for this variance? 17 18 19 How much of the master budget variance for Sales Retea was caused by some factor OTHER TH41 volume? What could account for this variance? U INCORREC CORRECT F INCORRECCORRECT U INCORREC CORRECT Enter reason here F INCORRECCORRECT Enter reason here 20 21 22 INCORRECCORRECT How much of the master budget variance for Advertising Expens.was caused by some factor OTHER TH1/V volume? What could account for this variance? Enter reason here 23 24 25 Budget assumptions: Volume 20,000 cases Sales Revenue $ 50.00 per case Percent sold on credit 90% percent of sales Variable Expenses CGS Sales Commission Shipping Expense Bad Debt Expense $ $ $ 30.00 per case 2.50 per case 2.00 per case 1.00% percent of credit sales Fixed Monthly Expenses Salaries $ 40,000 Lease on Distribution center $ 17,000 Depreciation on fleet & Equip $ 12,000 Advertising $ 10,000 Office rent, phone, internet $ 11,000 Management by exception 15%. Investigation rule Kelsey's Frozen Confectionaries Master Budget Performance Report For the month ended June 30 MASTER BUDGET 20,000 ACTUAL 21,460 VARIANCE 1,460 Volume (in cases) VAR. % 7.3% For U F Investigate? No $ 1,131,020 1,000,000 $ 131,020 13.17 F No $ 682,880 $ 58,685 $ 44,213 $ 16,930 $ 328,312 600,000 $ 50,000 $ 40,000 $ 9,000 $ 301,000 $ 82,880 8,685 4,213 7,930 27,312 13.8% 17.4% 10.5% 88.17 9.1%. uuuFF No Yes No Yes No Sales Revenue Less Variable Expenses: Cost of Goods Sold Sales Commissions Shipping Expense Bad debt expense Contribution Margin Less Fixed Expenses: Salaries Lease on Distn center Deprec. on fleetlequip Advertising Office rent, phone, net Operating Income 3,000 (1,500) UF None $ 43,000 $ 15,500 $ 12,000 $ 7,750 $ 12,300 $ 237,762 40,000 $ 17,000 $ 12,000 $ 10,000 $ 11,000 $ 211,000 $ 7.52 -8.8% 0.0% -22.5% 11.8% 12.72 No No No No No No (2,250) 1,300 26,762 CCT U Should follow the same format above in terms of account titles/subtitles. Kelsey's Frozen Confectionaries Fexible Budget Performance Report For the month ended June 30 FLEXIBLE BUDGET 0 21,460 ACTUAL 21,460 MASTER BUDGET 20,000 Volume (in cases) 1,460 $ 1,131,020 $ 58,020 $ 1,073,000 $ 73,000 $ 1,000,000 $ $ 682,880 $ 39,080 $ $ 58,685 $ 5,035 $ $ 44,213 $ 1,293 $ $ 16,930 $ 7,273 $ $ 328,312 $ 5,339 $ 643,800 $ 43,800 $ 53,650 $ 3,650 $ 42,920 $ 2,920 $ 9,657 $ 657 $ 322,973 $ 21,973 $ 600,000 50,000 40,000 9,000 301,000 Sales Revenue Less Variable Expenses: Cost of Goods Sold Sales Commissions Shipping Expense Bad debt expense Contribution Margin Less Fixed Expenses: Salaries Lease on Distn center Deprec. on fleet/equip Advertising Office rent, phone, net Operating Income 44 44 44 $ 43,000 $ $ $ 15,500 $ $ 12,000 $ $ 7.750 $ $ 12,300 $ $ 237,762 $ 3,000 $ (1.500) $ $ (2.250) $ 1,300 $ 4,789 $ 40,000 $ 17,000 $ 12,000 $ 10,000 $ 11,000 $ 232,973 $ 40,000 17,000 12,000 10,000 11,000 211,000 $ 21,973 $ Managers and auditors always analyze the variances between actual and budget. Say you were auditing this client and they gave you the following story (below is the story consistent with the overall pattern of variances? Which elements of the story are consistent with the explanations? Which variances are inconsistent, or left unexplained? Be sure to analyze every line item on the budget. Client Story: In order to motivate our sales force to increase sales, we decided to increase our commissions and salaries and increase marketing. At the same time, our supplier increased its prices, and we felt we could pass that cost increase on to our customers in the form of price increase. However, with the additional pressure to make sales, coupled with the increased sales price, we had to loosen credit terms on sales (extend more credit to more customers). We also had to lease aletle more distribution space and acquire another truck to handle the volume increase. Our shipping expense relates to gasoline used for deveries. Luckily, gas prices went down from what we originally expected this year. In the table below, classify each account on the budget according to whether the variances in the performance report are consistent, inconsistent, or left unexplained by the client's story. Place an "X" in the appropriate column. CHECK FIGURES: Incenc Stateneat line ite Consistent Inconsistent Urciplained All sales volume variances CORRECT X Flexible budget variances: Sales Revenue Cost of Goods sold Commission expense Shipping Expenses Bad debt expense Salaries expense Lease of distribution center Depreciation of fleet & Equip. Advertising expense Oficerent, phone, internet XX CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT X X E 1 c Dollar amount For U F D Possible reason H Dollar Ar For U Yes/Ho INCORREC CORRECT F INCORREC CORRECT F F INCORREC CORRECT INCORRECT INCORRECT F INCORRECCORRECT 1 Answer the following questions (dollar amount; For U?; Reason, when asked) 2 What is the flex budget variance for operating income? 4 What is the volume variance for operating income? 5 What do the flex budget variance and volume variance for operating income sum to? 7 Does this equal the total master budget variance Yes or No? 8 Should it always sum (or not) to the total master budget variance, even if one is U and one is F? Yes or No? 10 How much of the master budget variance for Sales was caused by an MAITION:HTED increase in volume? 11 12 How much of the master budget variance for Commission Expense was caused by an MUITION:HTED increase in volume? 13 14 How much of the master budget variance for Advertising Expense was caused by an M/TION:HTED increase in volume? 15 16 How much of the master budget variance for CGS was caused by some factor OTHER THWW volume? What could account for this variance? 17 18 19 How much of the master budget variance for Sales Retea was caused by some factor OTHER TH41 volume? What could account for this variance? U INCORREC CORRECT F INCORRECCORRECT U INCORREC CORRECT Enter reason here F INCORRECCORRECT Enter reason here 20 21 22 INCORRECCORRECT How much of the master budget variance for Advertising Expens.was caused by some factor OTHER TH1/V volume? What could account for this variance? Enter reason here 23 24 25 Budget assumptions: Volume 20,000 cases Sales Revenue $ 50.00 per case Percent sold on credit 90% percent of sales Variable Expenses CGS Sales Commission Shipping Expense Bad Debt Expense $ $ $ 30.00 per case 2.50 per case 2.00 per case 1.00% percent of credit sales Fixed Monthly Expenses Salaries $ 40,000 Lease on Distribution center $ 17,000 Depreciation on fleet & Equip $ 12,000 Advertising $ 10,000 Office rent, phone, internet $ 11,000 Management by exception 15%. Investigation rule Kelsey's Frozen Confectionaries Master Budget Performance Report For the month ended June 30 MASTER BUDGET 20,000 ACTUAL 21,460 VARIANCE 1,460 Volume (in cases) VAR. % 7.3% For U F Investigate? No $ 1,131,020 1,000,000 $ 131,020 13.17 F No $ 682,880 $ 58,685 $ 44,213 $ 16,930 $ 328,312 600,000 $ 50,000 $ 40,000 $ 9,000 $ 301,000 $ 82,880 8,685 4,213 7,930 27,312 13.8% 17.4% 10.5% 88.17 9.1%. uuuFF No Yes No Yes No Sales Revenue Less Variable Expenses: Cost of Goods Sold Sales Commissions Shipping Expense Bad debt expense Contribution Margin Less Fixed Expenses: Salaries Lease on Distn center Deprec. on fleetlequip Advertising Office rent, phone, net Operating Income 3,000 (1,500) UF None $ 43,000 $ 15,500 $ 12,000 $ 7,750 $ 12,300 $ 237,762 40,000 $ 17,000 $ 12,000 $ 10,000 $ 11,000 $ 211,000 $ 7.52 -8.8% 0.0% -22.5% 11.8% 12.72 No No No No No No (2,250) 1,300 26,762 CCT U Should follow the same format above in terms of account titles/subtitles. Kelsey's Frozen Confectionaries Fexible Budget Performance Report For the month ended June 30 FLEXIBLE BUDGET 0 21,460 ACTUAL 21,460 MASTER BUDGET 20,000 Volume (in cases) 1,460 $ 1,131,020 $ 58,020 $ 1,073,000 $ 73,000 $ 1,000,000 $ $ 682,880 $ 39,080 $ $ 58,685 $ 5,035 $ $ 44,213 $ 1,293 $ $ 16,930 $ 7,273 $ $ 328,312 $ 5,339 $ 643,800 $ 43,800 $ 53,650 $ 3,650 $ 42,920 $ 2,920 $ 9,657 $ 657 $ 322,973 $ 21,973 $ 600,000 50,000 40,000 9,000 301,000 Sales Revenue Less Variable Expenses: Cost of Goods Sold Sales Commissions Shipping Expense Bad debt expense Contribution Margin Less Fixed Expenses: Salaries Lease on Distn center Deprec. on fleet/equip Advertising Office rent, phone, net Operating Income 44 44 44 $ 43,000 $ $ $ 15,500 $ $ 12,000 $ $ 7.750 $ $ 12,300 $ $ 237,762 $ 3,000 $ (1.500) $ $ (2.250) $ 1,300 $ 4,789 $ 40,000 $ 17,000 $ 12,000 $ 10,000 $ 11,000 $ 232,973 $ 40,000 17,000 12,000 10,000 11,000 211,000 $ 21,973 $ Managers and auditors always analyze the variances between actual and budget. Say you were auditing this client and they gave you the following story (below is the story consistent with the overall pattern of variances? Which elements of the story are consistent with the explanations? Which variances are inconsistent, or left unexplained? Be sure to analyze every line item on the budget. Client Story: In order to motivate our sales force to increase sales, we decided to increase our commissions and salaries and increase marketing. At the same time, our supplier increased its prices, and we felt we could pass that cost increase on to our customers in the form of price increase. However, with the additional pressure to make sales, coupled with the increased sales price, we had to loosen credit terms on sales (extend more credit to more customers). We also had to lease aletle more distribution space and acquire another truck to handle the volume increase. Our shipping expense relates to gasoline used for deveries. Luckily, gas prices went down from what we originally expected this year. In the table below, classify each account on the budget according to whether the variances in the performance report are consistent, inconsistent, or left unexplained by the client's story. Place an "X" in the appropriate column. CHECK FIGURES: Incenc Stateneat line ite Consistent Inconsistent Urciplained All sales volume variances CORRECT X Flexible budget variances: Sales Revenue Cost of Goods sold Commission expense Shipping Expenses Bad debt expense Salaries expense Lease of distribution center Depreciation of fleet & Equip. Advertising expense Oficerent, phone, internet XX CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT CORRECT X X