Scenario:
Dancin’ Donuts, established in January 2019, is a thriving new business specializing in low-carb donuts. The 2019 keto diet fad led to increased sales, and the chief financial officer (CFO) prepared a robust budget for 2020. In early March 2020, the small business had record-breaking sales but abruptly needed to shut its doors because of the global pandemic. The CFO conducted the following analysis for the month of March:
| Dancin’ Donuts March 2020 | ||||||||
|
Budget |
Actuals |
$ Var |
% |
|||||
| Total Revenue |
200,000 |
196,947 |
-3,053 |
-2% |
||||
| Total Cost of Goods Sold |
100,000 |
98,000 |
-2,000 |
-2% |
||||
| GROSS PROFIT |
100,000 |
98,947 |
-1,053 |
-1% |
||||
| Total Expense |
75,000 |
72,000 |
-3,000 |
-4% |
||||
| Total Interest Income |
200 |
100 |
-100 |
-50% |
||||
| Total Other Expense |
1,000 |
1,000 |
0 |
0% |
||||
|
-800 |
-900 |
-100 |
13% |
|||||
| Earnings Before Interest, Taxes, Depreciation, & Amortization (EBITDA) |
24,200 |
26,047 |
1,847 |
8% |
||||
| Total Interest Expense |
6,400 |
6,385 |
-15 |
0% |
||||
| Total Depreciation & Amortization |
10,000 |
10,000 |
0 |
0% |
||||
| Earnings Before Taxes (EBT) |
7,800 |
9,662 |
1,862 |
24% |
||||
| Total Income Taxes (30%) |
2,340 |
2,899 |
559 |
24% |
||||
| Net Income |
5,460 |
6,764 |
1,304 |
24% |
||||
Please answer the following questions:
- What does AVB stand for?
- What is the total revenue for March 2020 when compared to the budget?
- What is the variance from the budget in the net income for the month?
- What is the income tax percentage for the month?
