Radcliff Ltd. has budgeted the following sales for the next three months: January February March Budgeted Sales $80,000 $100,000 $140,000 Ninety percent of sales are on account and ten percent of sales are cash sales. A month's sales on account are collected as follows: Month of sale 50% First month following sale 40% Second month following sale 9% Uncollectible 1% The company requires a minimum cash balance of $7,000 to start a month. The beginning cash balance in March is budgeted to be $8,000. The following additional information has been provided for the company: February Inventory purchases (75% paid in February, the remainder paid in March) $55,000 March Inventory purchases (75% paid in March, the remainder to be paid in April) $43,000 Operating expenses (all paid in March) 35,000 Depreciation expense for March 15,000 Dividends paid in March 7,500 a) Compute the budgeted cash receipts for March. b) Prepare a cash budget in good form for the month of March. The company can borrow in any dollar amount and will not pay interest until April. c) Why is it important for a company to create monthly cash budgets?

Question 2 Marsden makes contact tracing tracking devices and has the following sales budget for the first six months of the year. January 40,000 units February 55,000 units March 60,000 units April 50,000 units May 45,000 units June 40,000 units The inventory of finished goods at the end of each month is budgeted to be 15% of the next month's sales. Due to unexpected sales activity in the prior year, at the beginning of January the finished goods inventory totaled only 4,500 units. Each tracking device requires 2 specialized computer chips. Since the supply of the specialized chips is inconsistent, the company keeps an inventory of the specialized chips at the end of each month equal to 45% of the next month's production needs. On January 1 Marsden had 40,000 of the specialized chips in inventory. The chips are stored in a secure storage locker that can hold 250,000 chips. Required: a) Prepare a budget showing the quantity of specialized computer chips to be purchased for the first quarter of the year. b) The purchasing manager may be able to secure a volume discount by purchasing 500,000 chips per order. What impacts (positive and negative) would there be for the company if they decide to purchase 500,000 chips per order?

Question 3 Fenshaw Grove Electrical Services Inc. provides electricians to large commercial construction job sites within the North Vancouver Island region. The following table shows budgeted and actual results for Fenshaw Grove for the month of May. The budgeted total cost per hour of billed services is $69/hour based on the information below. Fenshaw Grove charges their customers $103.50 per hour of billed services (1.5 times their total cost per hour of billed services). The budgeted monthly Rent and Utilities cost reflects the budgeted annual cost divided by 12. However, utilities costs vary significantly throughout the year and are highest in the colder months of November through March. Because the company knows well in advance the number of construction jobs they have successfully bid on, the actual number of jobs and the budgeted number of jobs for the month of May is 26 jobs. Fenshaw Grove had to let one of their apprentice electricians go because they were stealing supplies from the company. They filled the position with an experienced electrician. Budgeted travel costs are based on the anticipated location of the job sites where Fenshaw Grove will be providing services. Budgeted Amounts Actual Results Electricians Hours Billed 650 hours 590 hours Electricians Average hourly wage rate $45 $46.50 Administrative Salaries $4,500 $4,500 Equipment and Supplies Costs $6,500 $6,450 Rent and Utilities $3,350 $3,780 Travel Costs to job sites $1,250 $ 905 Required: a) How does actual total cost per hour of billed services compare with the budgeted total cost per hour of billed services? b) Calculate the rate and the efficiency variances for the wages and the total variances for the other costs and indicate if each variance is favourable or unfavourable. c) Provide a potential cause for each variance. d) What are the most significant causes of the difference in the total cost per hour of billed services between budgeted and actual total cost per hour of billed services? Are these costs controllable by the company? e) How does variance analysis help the owner of Fenshaw Grove improve their business? f) If the industry average charge to customers is $105 per hour of billed services should Fenshaw Grove pass their additional cost per hour of billed services on to their customers on future job bids? Explain your answer.