Iâ€™m trying to learn for my Business class and Iâ€™m stuck. Can you help?
Analyze the following case:
At the beginning of the year, Ted Frey decided to prepare a cash budget for the year, based upon
anticipated cash receipts and payments. The estimates in the budget represent a â€œbest guess.â€
The budget is as follows:
Expected annual cash receipts:
Salary from part-time job – $10,000
Salary from summer job – 4,000
Total Receipts $14,000
Expected annual cash payment:
Total payments 15,700
Net change in cash $?
Assume you are a managerial consultant and Ted has come to you for advice. If events during
the year take place as he anticipated in the above budget, he will be $1,700 short.
Prepare a written report for Ted that addresses ALL points of discussion listed below.
(DISCUSS in paragraph form â€“ DO NOT answer individual questions). Remember â€“ Ted
has asked you to review his budget, address the issues below and provide him with a
-What does this budget suggest?
-In what ways is this information useful?
-Some items in the budget are more certain than others. What are the implications of these different levels of certainty to Tedâ€™s planning?
-Some payment items are more controllable than others. Assuming that Ted plans to go to
school, classify the items as
controllable, partially controllable, or not controllable.
What are the implications of controllable items to planning?
-What actions could Ted take in order to avoid having the anticipated shortfall of $1,700 at the end of the year?
-What does this budget fail to consider, and what are the implications of these omissions to Tedâ€™s planning?