Dancin’ Donuts, established in January 2019, is a thriving new business specializing in low-carb donuts.
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?
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