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This is an Analysed Cash Book and Monitoring of Overheads Question - Junior Cycle Business Studies - Question 5 - 2016

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This is an Analysed Cash Book and Monitoring of Overheads Question. Answer all parts of this question: (A) Prepare the Analysed Cash Book of HOGAN CATERING Ltd fro... show full transcript

Worked Solution & Example Answer:This is an Analysed Cash Book and Monitoring of Overheads Question - Junior Cycle Business Studies - Question 5 - 2016

Step 1

Prepare the Analysed Cash Book of HOGAN CATERING Ltd

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Answer

Analysed Cash Book of HOGAN CATERING Ltd (Debit Side)

DateDetailsReceipt NoAmount €
01/05/2016Balance b/d3,000
02/05/2016IngredientsVisa Debit3,400
22/05/2016Received from Kelly Ltd2 DL3,700
31/05/2016Balance c/d3,400

Total: €14,000

Analysed Cash Book of HOGAN CATERING Ltd (Credit Side)

DateDetailsPayment MethodAmount €
02/05/2016IngredientsVisa Debit3,400
03/05/2016WagesPaypath1,700
07/05/2016DieselVisa Debit600
10/05/2016Waste CollectionVisa Debit450
12/05/2016Van InsuranceVisa Debit1,100
14/05/2016DieselVisa Debit500
17/05/2016WagesPaypath1,300
20/05/2016IngredientsVisa Debit2,800
25/05/2016Waste CollectionVisa Debit700
31/05/2016WagesPaypath1,450

Total: €14,000

Step 2

Complete the Actual Columns

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Answer

OverheadsActual €Budgeted €Difference €
Van2,2002,300-100
Wages4,4505,000-550
Ingredients6,2005,500700
Waste Collection1,150700450

Step 3

List the overheads whose actual figures are greater than the budgeted figures

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Answer

  1. Ingredients: This may be due to increased sales, leading to higher purchase costs.

  2. Waste Collection: An increase in the price of waste collection services might have caused this.

Step 4

List the overheads whose actual figures are less than the budgeted figures

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Answer

  1. Van: This may be due to an incorrect figure in the budget.

  2. Wages: A reduction in overtime hours might have led to lower wages.

Step 5

State three reasons why it is important for a business to monitor its overheads

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Answer

  1. To allow for comparison between actual and budgeted overheads, helping to identify areas for cost control.

  2. To ensure that a business lives within its means, thus preventing financial difficulties.

  3. To identify the main overheads so that changes can be made if needed.

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