Case on Budgeting

Case On Budgeting Student’s Name Institutional Affiliation Course Class Date Case On Budgeting Research describes a budgeted income statement as a financial statement that organizations use to estimate their future bottom lines (Palepu et al., 2020). This specifically considers the company’s revenues, expenses, and its projected sales and costs. The budgeted statement provided by the previous cost accountant outlines the anticipated financial performance of Ciccetti Corporation based on the planned activities and related costs. Explanation of the Budgeted Income Statement Flexible Budget The first item we can look at in the statement is the flexible budget, which represents expected financial outcomes founded on actual activity levels. This column will adjust based on changes in the activity (number of customers served), which is important for correct performance appraisal (Wild & Shaw, 2019). Therefore, David can change the planning budget figures using the activity variances to develop a flexible budget that resonates with actual activity levels. It involves adding or subtracting activity variances from the planning budget amounts. Flexible Budget Revenue=Planning Budget Revenue + Revenue Activity Variance =$158400+ $14400 Flexible Budget Revenue= $172800 Activity Variances These variances identify the differences between the actual activity level and the planned activity level. Any positive variances demonstrate that actual performance surpasses the planned activity level and vice visor (Wild & Shaw, 2019). David can estimate activity variances for revenues and expenses to comprehend how changes in activity levels affect financial outcomes. For instance; Activity Variance for Revenue= (Actual Activity−Planned Activity) ×Budgeted Rate per customer = (36,000 - 33,000) \times $4.80 = 3,000 \times $4.80 = $14,400 Planning Budget This shows the budgeted amount base...