1) Construct Harry's cash budget for the 3 months April, May, and June and the total for the 2nd quarter. Fixed overhead expenses requiring the use of cash may be grouped together as a single line item called "fixed overhead". Variable overhead items may be grouped together as a single line item called "variable overhead". Show any necessary calculations.
2) Construct Harry's contribution margin format budgeted income statement for the 3 months April, May, and June and the total for the 2nd quarter. Fixed overhead expenses may be grouped together as fixed overhead. Variable overhead expenses may be grouped together as variable overhead. Remember to include interest on any borrowings. Show any necessary calculations.
3) Explain why Harry is facing a cash flow problem in May even though his business is profitable
4) During April Harry actually produced and sold 175,000 widgets. Actual sales revenues were $4,342,000. Actual costs were as detailed in the table below. Complete the table by constructing a flexible budget and performance report including variances for April based on 175,000 widgets. Your performance report should be similar to the performance report shown in exhibit 10.7 of page 559 except your report includes detailed cost production cost line items. Use the template provided below for your answer.
5) Write a brief report explaining the most important reasons why Harry's profits were different from the amount projected in the master budget.