Management Accounts - Budget Project



Management Accounts - Budget Project

Task 1: Cash Budget

a. Comparison

Budgeted Cash Flow of St Johns Ltd, total Cash Received from invoice during these moths were £70,200, £51,800 and £9,600 while in actual, total Cash Received from invoice during these moths were £62,550, £19,650 and £9,320. This is due to the fact that company had predicted more cash receipts during these months while due to other factors; company was unable to generate the targeted cash. The variances of cash receipts are unfavourable since company expectation was more than what actually took place. The cash variance was £7,650, £32,150 and £280.

Budgeted Salaries were £35,000 through three months and actual salaries were also same, hence there were no deviation from what was expected by the management. As far as Repairs and maintenance is concern, budget amount was £1,400, £2,400 and £2,400 while actual amount were £5,400, £5,210 and £4,800. Considering this amount, Repairs and maintenance variance are unfavourable for three months i.e. £4,000, £2,810 and £2,400. Company had incurred more amounts in Repairs and maintenance that what was expected by the company. As College supplies budgeted amounts is concern, company incurred higher amount during these three months and due to this variance for this header is also unfavourable.

Administration costs variance for initial month is favourable while for other month; the amount is more than budgeted, resulted in unfavourable variance. Total cash disbursement variance for three months are unfavourable due to much higher amount incurred than what actually incurred by the company. The other reason for higher cash disbursement is due to dividend payment that company did not budgeted and this has increase overall actual budget with £60,000 during initial month and this has ultimately reduce cash balance at the end of month (Stice, Stice, Swain, 2012).

Hence, Cash Balance during March is unfavourable due to budgeted cash balance which was much higher than what actually company left with (Don, Maryanne, & Guan, 2007).

b.

In the St Johns Ltd cash budget, the three significant deviations from cash budget are as followed:

The above were the main significant deviations that took place in cash budget. Total Cash Received from invoice was unfavourable. This could be due to market condition that might not be favouring vocational training classes. Moreover, this could also due to less demand for such classes since economy has been experiencing downfall and people would not be ...