Gce Model Questions Vol1 2018 Financial Accounting Question 4

A local government authority prepared its annual budget for 2025 (figures in \(\text{₦}\) thousands) as follows:\nRevenue - Tax revenue \(150,000\), Grants \(30,000\), Other income \(10,000\). Total budgeted revenue = \(190,000\).\nExpenditure - Salaries \(80,000\), Maintenance \(25,000\), Capital projects \(40,000\), Debt service \(10,000\), Miscellaneous \(5,000\). Total budgeted expenditure = \(160,000\).\nActual results at year‑end: Tax revenue \(138,000\), Grants \(32,000\), Other income \(9,500\). Actual revenue = \(179,500\).\nExpenditure actual: Salaries \(85,000\), Maintenance \(27,000\), Capital projects \(38,000\), Debt service \(12,000\), Miscellaneous \(6,500\). Actual expenditure = \(168,500\).\nThe authority regards any variance exceeding 5 % of the total budgeted revenue as material and requires a comment. Calculate the percentage variance for revenue and for expenditure, state whether each variance is material, and suggest one appropriate managerial action for each material variance.