Question

Assume Cindy has cash on hand of $550 at the beginning of March. Her monthly salary (take home) is $1,800. Her expenses are as follows: Rent $650, utilities $125, Telephone, cable and internet $90, food and clothing $300. In April, she expects to get tax refund of $240. In May, she plans to take a short vacation with cost of $450. Prepare Cindy’s cash budget for the months of March, April and May, and the total for the three months. On which of her monthly expenses will she likely have variances? And why?

Answer 1

Cash Budget

	March	April	May
Opening balance	550	1185	2060
Salary	1800	1800	1800
Expenses
Rent	-650	-650	-650
Utilities	-125	-125	-125
Telephone	-90	-90	-90
Food and clothing	-300	-300	-300
Tax refund		240
Vacation cost			-450
Ending balance	1185	2060	2245

She can have variances on the variable expenses of Utilities , Telephone, cable and internet, food and clothing. The vacation expense may also be more of less than planned. This is because they are variable expenses and depend upon the actual usage. They may change as per requirements and needs or desires.

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