The approved $2024$ Operating Budget for XYZ Ltd$.$ Is provided below, along with actual

results for the first quarter of the year provided to you by your accounting assistant.

$2024$ Actual to

Budget March $31/24$

Revenue

Sales $$200,000$ $$45,000$

Rental income $20,0006,000$

Grants and Donations $10,0003,000$

User fees $50,00020,000$

Miscellaneous $5,0002,000$

Total revenue $285,00076,000$

Expenses

Salaries $145,00050,000$

Wages $18,0002,000$

Benefits $15,0003,000$

Materials $25,0008,000$

Supplies $5,0001,500$

Contracted services $10,0004,000$

Utilities $4,8001,200$

Insurance $4,0001,000$

Rent $10,0003,000$

Advertising $12,0008,000$

Travel $4,0002,000$

Total expense $252,80083,700$

Surplus$/$deficit $$32,200(7,700)$

The Controller has asked you to complete the following tasks:

Allocate the annual budget, on a quarterly basis, over the year, given the

information below:

$($a$)$ Sales $-30\%$ of sales occur in December. The balance of sales occur equally

over the remaining $11$ months

$($b$)$ Rental income is earned equally over the year

$($c$)25\%$ of grants and donations are received in March, June, Sept and Dec

$($d$)$ User fees are earned in June and July $-25\%$ in June and $75\%$ in July

$($e$)$ Miscellaneous revenue is earned completely in December

$($f$)$ Salaries are paid equally over the year

$($g$)$ Wages allow the company to hire $4$ summer students over the

months of May to August $($an equal amount is spent each month

during that period$)$

$($h$)$ Benefits expense is $10\mathrm{.}34\%$ of monthly budgeted salaries

$($i$)$ Monthly materials expense in incurred in the same proportion as sales $[$see $($a$)]$

$($j$)$ Contracted services are incurred equally in August and September

$($k$)$ Utilities, rent and insurance expenses are incurred equally in each month

$($l$)50\%$ of advertising expenses are incurred in Nov and Dec. The remaining

$50\%$ is spent equally over the balance of the year.

$($m$)$ Travel expenses are incurred $50\%$ in May and $50\%$ in October

$($n$)$ The years total supplies are purchased in January

NOTE: Total budget allocations must agree with the total $2024$ budget provided. Any

required rounding should be done in the last quarter allocation.

Prepare a "Budget Variance Report" as of March $31,2024.$ Provide possible

explanations for any variances in excess of $$5,000$ as of March $31,2024$

Prepare a "Cash Flow Budget", on a quarterly basis, given the following:

$($a$)$ Assume actual revenues and expenditures for $2024$

are the same as quarterly budget distributions developed in Part $1$ of

this question.

$($b$)$ The company borrowed $$48,000$ in April, $2024$ to be repaid monthly

over the next year $($starting in May, $2024).$ In addition to the principal repayment,

$$100$ of interest will be paid each month

$($c$)$ The company bank balance is $$100,000$ on January $1,2024$

$($Hint : Cash Balance at December $31,2024$ $$147,400)$

The CFO has asked you for comments on the projected cash flow for $2024.$

What points would you bring to the CFO's attention?