Chalkboard was commenced by Louis Turner. Chalkboard is an innovative technology company that provides a platform for the posting of best-practice teaching videos and commentary. Its strategy is focused around being the number one enabler of teaching best practice using a visual medium: videos and commentary. The business provides Louis with the opportunity to combine his two passions: teaching and technology. The platform has now developed to the point where some of the videos are posted by teachers, while others are commissioned by Louis himself. He also provides some of the hardware necessary to facilitate high-quality video production. Best-practice videos now cover primary, secondary and tertiary educational settings. Revenue is generated by advertising on the platform, as well as a growing subscription service that offers premium content. While most of the cash budget items are relatively easy to predict, Louis is worried about the ones where budget and actual figures differ. He wants to invest in order to expand and wonders if he can. The cash budget for Chalkboard is as follows.

Required
(a) Calculate the variances for each of the three months.
(b) Louis is hoping to invest in some new computing technology (estimated at $12000) during the second quarter of 2020. He is hoping not to have to borrow to do so. Do you think he has sufficient cash reserves to do this?

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Anticipated receipts Subscriptions Advertising Total receipts Anticipated payments Wages Platform costs Marketing Administration Total payments Excess (deficit) receipts over payments Bank balance at beginning of month Bank balance at end of month CHALKBOARD Cash budget for the 3 months ending 31 March 2020 January February Budget Actual $ $ 22 000 34 000 56 000 21 500 18000 6100 5400 51000 5000 24500 30 500 55 000 33 000 21500 18 000 6 100 5400 51 000 4000 28000 28 000 32 000 Var. Budget $ $ 20 000 28 000 48 000 21 500 18 000 4500 5400 49 400 Actual $ 33 000 21 200 26 500 47 700 21500 18 000 5200 5400 50 100 (1400) (2400) 32 000 31 600 29 600 Var. $ Budget $ 18000 22 000 40000 21500 18000 3800 5400 48 700 March Actual $ 15400 16000 31400 22 900 21 500 18000 4400 5400 49 300 (8 700) (17900) 31 600 29600 11700 Var. $