You are the Accountant for a small retail business and have been asked by management to review and examine the following financial report for the month of July and complete the questions asked

  • Case Study
You are the Accountant for a small retail business and have been asked by management to review and examine the following financial report for the month of July and complete the questions asked

 

Line 1 Item Budget $ Actual $
1 Sales 45000 40000
2 Cost of Goods Sold 22500 20500
3 Gross Profit 22500 19500
4 Expenses
5 Wages 14000 14700
6 Packaging 400 350
7 Cleaning 350 300
8 Advertising 2500 2700
9 Rent – premises 2600 2850
10 Telephone 400 430
11 Total Expenses 20250 21330
12 Net Profit 2250 (1830)
  1. Complete the chart below by identifying variances and listing each variance as favorable (F) or unfavorable (U). Include any comments you may have to explain the variances.

 

 

Line No. Variance Comments
Type $ F/U
1 Sales 5 u
2 Cost of Goods Sold
3 Gross Profit
4 Wages
5 Packaging
6 Cleaning
7 Advertising
8 Rent – premises
9 Telephone
10 Net profit