Question
Q1)The following information summarizes all cash-related transactions for BBB.Ltd in 2018: 1. BBB. Ltd had $25,000 cash in its Bank account at the start of
Q1)The following information summarizes all cash-related transactions for BBB.Ltd in 2018: 1. BBB. Ltd had $25,000 cash in its Bank account at the start of 2018. 2. On 1 January 2018 the company took out a $75,000 loan from Arab Bank. The loan has an annual interest rate of 15%. The interest on the loan was paid on time in 2018. BBB .Ltd sells its products to customers on credit (the agreed credit term is 30 days). During 2018, it received $850,000 from customers in respect of sales of inventory made to them. 3. BBB. Ltd purchased components for its products on credit (the agreed credit term is also 30 days). During 2018, it paid $550,000 to suppliers for purchases of components. 4. A new production line was acquired in the year at a cost of $120,000. 5. Salaries paid for the year amounted to $40,000. Various other operating expenses paid for by the business amounted to $75,000 for the year. 6. $25,000 was paid to shareholders as dividends. 7. Last years tax liability to BBB.Ltd of $22,000 was settled in 2018. Required: Prepare BBB.Ltds statement of cash flows for the year to 31 December 2018 using the direct method.
Q2)The following information had been prepared for XYZ Limited for the year to 31 December 2019.
| Activity Level | Fixed Budget US$ | Actual Costs US$ |
| Direct Material | 100,000 | 115,00 |
| Direct Labor | 150,000 | 185,000 |
| Variable Overhead | 50,000 | 55,000 |
| Total Variable Costs | 300,000 | 355,000 |
| Fixed Cost | 60,000 | 65,000 |
| Total Costs | 360,000 | 420,000 |
Complete the following table below assumes that the XYZ Company adapts the flexible budget method based on 120 % of its operating activities costs. Indicate whether the variance is a favorable or adverse under each budgeting system (fixed and flexible budget)
(1) (2) (3) (4) (5) (6) (7)
Activity Level Fixed Budget Flexible Budget (120%)
Actual Costs Fixed- Actual
Favorable/ Adverse
Flexible- Actual
Favorable /Adverse
US$ US$ US$ US$ US$
Direct Materials 100,000 115,000 Direct Labor 150,000 185,000 Variables Overhead 50,000 55,000 Total Variables Costs 300,000 355,000 Fixed Costs 60,000 65,000 Total Costs 360,000 420,000
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