Managerial Accounting Assignment 2023 Business Finance

2023 Assignment 2 This assignment is composed of 3 main questions on Unit 4 You are required to prepare and or complete and

Assignment #2


  • This assignment is composed of 3 main questions on Unit 4.
  • You are required to prepare and/or complete and then submit the appropriate financial statements and calculations. Please show the steps you used to compute the figures as partial marks can be assigned for proper formulations even if the calculated total is incorrect.   
  • Clearly identify on the page footer your name and student number.
  • This paper will be marked out of 50 with your overall result counting towards 10% of your final grade. Please send me your assignment through the dropbox below.


Q1. (15 marks) On March 31, Streuling Enterprises, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totalling $85,000. Sales, in units, have been budgeted as follows for the next four months:










Streuling’s board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month’s budgeted sales.


The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month.



a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June. Remember there is a difference between units and $of the units – use the right figures in the right spots

b) Prepare a schedule of expected cash collections for each of the months April, May, and June. Remember the existing A/R balance




(15 marks) The Doley Company has planned the following sales for the next three months:






Budgeted Sales





Sales are made 20% for cash and 80% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern:


Month of sale


First month following sale


Second month following sale





The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in March is budgeted to be $6,000.






a)     Compute the budgeted cash receipts for March. Rember to think in terms of when actual cash is planned to be received. If you are not going to receive the cash it is not part of the budget. Also pay close attention to cash vs credit sales


b)     The following additional information has been provided for March:

        Inventory purchases (all paid in cash in March)


        Operating Expenses (all paid in cash in March)


       Depreciation expense for March


        Dividends paid in March



Prepare a cash budget in good form for the month of March, using this information and the budgeted cash receipts you computed for part a) above. The company can borrow in any dollar amount and will not pay interest until April.




Q3. (20 marks) Fougere Realtors, Inc. specializes in home re-sales. It earns revenue from selling fees. Fougere Realtors’ major costs are commissions for salespersons, listing agents, and listing companies. Its business has improved steadily over the last ten years. As usual, Chris Fougere, the managing partner of Fougere Realtors, Inc., received a report summarizing the performance for the most recent year.


Fougere Realtors, Inc.

Performance Report

For the year ended December 31, 2007


                                                      Budget            Actual      Variance


Number of home re-sales                                            180                  202                 22 F

Variable expenses

Sales commissions                                           $1,102,950      $1,205,183      $102,233 U

Automobile                                                            36,000            39,560            3,560 U

Advertising                                                           171,000           192,690          21,690 U

General overhead                                                 656,100           716,970          60,870 U

Total                                                               $1,966,050      $2,154,403      $188,353 U

Fixed expenses

General overhead                                                   60,000            62,300            2,300 U

Total expenses                                                 $2,026,050      $2,216,703      $190,653 U



a) Explain the major weakness of this performance report and why all the variances for the variable expenses are unfavourable (U)  (5 marks)

b)     As a first step in helping Chris Fougere to evaluate cost / expense control in the organization, complete the following for the year ended December 31, 2007, assuming the only cost driver is the number of home re-sales. (Note: Indicate any variance as either favourable (F) or unfavourable (U).) (15 marks)



                                                                    Budget          Actual           Variance


Number of home re-sales                                     202                  202                          0


Variable expenses


Sales commissions           $                                        $ 1,205,183           _________


Automobile                       $                _________            39,560           _________


Advertising                       $                _________           192,690           _________


General overhead             $                _________           716,970           _________



Total                                 $                _________      $2,154,403           _________


Fixed expenses


General overhead             $                _________            62,300            _________



Total expenses                        $                                        $2,216,703                           



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