After the annual budget review process is completed and all budget adjustments are accounted for, the YR 1 Budget is subject to a comprehensive review at the department level. The process assures that any material increase or decrease in revenue or expenses are validated and aligned with departmental goals and objectives.

1. Finalize the 5-Year Budget and update the comparison of the Current YR Actual and Final YR 1 Budget. Use template Template A15. Explain any major variances you encounter.
2. Develop a methodology for the monthly allocation of the YR 1 Budget. Provide an explanation of the rationale for the monthly allocation methodology and why it is suitable for Anthony's Orchard business and its department structure. Use templates A16 and A17.
3. Complete a monthly allocation of YR 1 budget, cash flow, and balance sheet for the total company. Explain why 1st quarter projections need to have high level of accuracy and reliability. Include key metrics at the bottom of the Monthly Budget. Review templates C14- C21 to establish a historical perspective of cash flow and balance sheet analysis. Complete templates A19 and A20.
4. Finalize the Year 1 Budget Package. Prepare an executive summary (3-4 pages) of the Master Budget for the Board of Directors' approval. Attach or include the following:
a) A comparative analysis of the Current Year Forecast versus the Year 1 Budget. Use template A15.
b) A Monthly Budget, Cash Flow, and Balance Sheet. Use templates A16, A17, A18, and A19.
c) Update the 5-Year Financial Plan Summary from Week 1. Comment on any gaps between Management and the Board’s proposed Financial Plan. Use template A20.
d) Comment on each major initiative that will drive financial performance in Budget Year 1. Also, review the SWOT analysis from Week 1 and comment on open projects or risk issues that were not addressed in the Budget.
e) Explain the YR 1 monthly budget allocation with emphasis on seasonal patterns and 1st Quarter Budget.

Current Year Forecast and YR 1 Budget / Updated For Plan Review Adjustments
A15					Use Final Year 1 Budget Number
					From 5 Year Plan
			Current YR -Forecast		Year 1 Budget		% Increase
Sales Plan by Product Category / Department	GL Accounts	Department	$	%	$	%	(decrease)	Variance Analysis and Commentary
				Revenues		Revenues
Prepared Apple Products	1000	100	6,621,468	60.17%			-100.00%
Pick Your Own Apples	1100	200	2,273,180	34.33%			-100.00%
Community Events	1200	300	2,110,560	31.87%			-100.00%
Total Revenue			11,005,208	100.00%			-100.00%
Cost of Sales			9,106,901	82.75%			-100.00%
			82.75%
Gross Profit			1,898,307	17.25%			-100.00%
			17.25%
Administrative Cost	1300	400	1,075,000	9.77%			-100.00%
Interest on debt	1400	500	215,000	1.95%			-100.00%
Depreciation	1500	600	-	0.00%			#DIV/0!
Net Income Before Taxes			608,307	5.53%			-100.00%
Income taxes	1600	700	243,323	2.21%			-100.00%
Net Income			364,984	3.32%			-100.00%

Week 6

Budget Management with Monthly Variance Analysis
					Current Year Forecast and YR 1 Budget / Classified by General Ledger Accounts
Introduction		C14
After the 5-Year Plan validation process is substantially complete, the budget process shifts focus to Current Year Forecast and Year 1 Budget. Both Current Year Forecast and Year 1 Budget are validated at Profit and Cost Center level. After the Forecast and Budget Validation process is completed and required adjustments are made, the annual Year 1 budget is allocated by month. After the budget is approved and loaded into the General Ledger Accounting System, monthly actual results are reported against budget for each month. Companies will often prepare a monthly forecast as a validation of the Current Year Budget. Forecast updates take into account shifting sales plans and corrections to budget spending.		This template provides focus on Year 1 Budget with direct comparison against the current year forecast, which is the baseline for YR 1 Budget. You have been provided with the monthly forecast and asked to prepare a monthly allocation of the YR 1 Budget. Monthly allocation of budgets are done on a broad level with use of historical trend analysis and then refined for specific transactions or anticipated events.						Current YR -Forecast		Year 1 Budget		$	% Increase
					Sales Plan by Product Category / Department	GL Accounts	Department	$	%	$	%	Incr (Decr)	(decrease)
									Revenues		Revenues
					Prepared Apple Products	1000	100	6,621,468	60.17%	6,886,327	60.99%	264,859	4.00%
					Pick Your Own Apples	1100	200	2,273,180	34.33%	2,273,180	33.01%	-	0.00%
					Community Events	1200	300	2,110,560	31.87%	2,131,666	30.96%	21,106	1.00%
					Total Revenue			11,005,208	100.00%	11,291,172	100.00%	285,964	2.60%
					Cost of Sales			9,106,901	82.75%	9,356,995	100.00%	250,094	2.75%
								82.75%		82.87%
					Gross Profit			1,898,307	17.25%	1,934,177	17.13%	35,871	1.89%
								17.25%		17.13%
					Administrative Cost	1300	400	1,075,000	9.77%	1,100,000	9.74%	25,000	2.33%
					Interest on debt	1400	500	215,000	1.95%	215,000	1.90%	-	0.00%
					Depreciation	1500	600	-	0.00%	-	0.00%	-	#DIV/0!
					Net Income Before Taxes			608,307	5.53%	619,177	5.48%	10,871	1.79%

Answer rating: 100% (QA)

Q1 In this question we will focus on the year 1 budget against current year forecast which is a baseline of YR 1 budget Sales plan by product category are taken as prepared Apple products pick your ow... View the full answer