The approved 2020 operating budget for XYZ ltd. Is provide below, along with actual results for the first quarter of the year provided to you by your accounting assistant.

2020 Budget Actual to March 31, 2020

Revenue

sales $200,000 $45,000

Rental income 20,000 6000

Grants and Donations 10,000 3,000

User fees 50,000 20,000

Miscellaneous 5,000 2,000

Total Revenue 285,000 76,000

Expenses

Salaries 145,000 50,000

wages 18,000 2,000

benefits 15,000 3,000

Materials 25,000 8,000

Supplies 5,000 1500

Contracted services 10,000 4000

Utilities 4800 1200

Insurance 4000 1000

Rent 10,000 3000

Advertising 12000 8000

Travel 4000 2000

Total expenses 252,800 83,700

Surplus/deficit $32,200 (7700)

The Controller has asked you complete the following tasks:

1. 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 December

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

(e) Miscellanceous 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 10.34% 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 expense 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 2020 budget provided. Any required rounding should be done in the last quarter allocation.

2. Prepare a "Budget Variance Report" as of March 31,2020. Provide possible explanations for any variances in excess of $5000 as of March 31, 2020.

3. Prepare a "Cash flow Budget" , on a quarterly basis , given the following:

(a) Assume actual revenues and expenditures for 2020 are the same as quarterly budget distributions developed in part 1 of this question.

(b) The company borrowed $48,000 in April, 2020 to be repaid monthly over the next year (starting in May, 2020). In addition to the principal repayment, $100 of interest will be paid each month

(c) The company bank balance is $100,000 on January 1,2020

(Hint: Cash balance at December 31, 2020 $147,400)