The following annual information is provided for Claude’s Book store.

Performance Report for the year 2019-2020

Claude’s Book Store

	Budget	Actual	Variance
Sales Revenue	$206,000	$202,000
Cost of sales	$104,000	$101,000
Marketing expenses:
Advertising	$3,500	$4,500
Administration expenses:
Salaries and wages	$95,000	$85,000
Rent of shop	$8,000	$8,500
Electricity	$2,500	$2,200
Telephone	$1,200	$1,200
Financial expenses:
Interest paid	$200	$300
Total operating expenses
Net Profit

Required:
a) Complete the table above to:
• calculate variances, and
• determine whether they are favourable or unfavourable.

You have been asked to keep track of the variance for Claude’s Book Store into the next year.
You have confirmed the following figures (actual) for the first quarter of 2020-2021:
• Sales revenue: $50K
• Cost of sales: $27K
• Advertising: $1,250.00
• Telephone: $330.00

Rest of the other balances stayed the same as were in 2019-2020.

Required:
Assuming the budget for the year 2019-2020 stayed the same, calculate the new variances for the figures above. Don't forget to convert the yearly budget into quarterly budget.
Draft a short report addressed to the client to confirm your findings and state whether the new variances are favourable or unfavourable for the business. Ask for advice from the client on how they think the variances can be addressed.

Answer rating: 100% (QA)

performance report is a report which shows how the business had performed in its operations for the sake of earning a profit given is a performance report of an organization with actual and budgeted i... View the full answer