Rift valley University Valley Harar campus

All of 1rd year Acct Student TVET Program Regular,

Assignment for Develop and Use Personal Budget and Saving Plan

INDIVIDUAL ASSIGNMENT 25%

Model Exam Question

Project 01: Develop and Use Personal Budget and Saving Plan

Abebe an employee of 3F Furniture Company earns a monthly net income of Birr 15,000.00.
25% of the total income is used to cover his fixed cost and the remaining income is used to cover
his variable expense and savings. His saving is 15% of his variable expense. The actual variable
expense is 85% of budgeted variable expense but fixed cost remains constant. If the variable
expenses budget is deficit deducted from personal saving and if surplus added to personal saving.
His salary expected to increase by 20% for the month of February 2015.

Task 3.1: Prepare budget performance report for the month of December 2014.

Task 3.2: Develop personal budget for March 2015.

Task 3.3: Calculate total saving at the end of March 2015 and identify the related investment
opportunities.

Task 3.4: Identify the investment related risks of personal saving.

Project 02: Develop personal budget, saving plan and Business Practice

Instruction: Under this project you are expected to perform the following tasks based on
the information provided.

The following data is given for Actual income and expenditures of Bilise for the month of
December 2015. The difference between total income and expenditures is personal saving. Using
her personal saving, Bilise has a plan to establish a business in the future.

Description Actual income and expenditures

(December, 2015)
INCOME:
Salary Income (net) 6,000
EXPENDITURES:

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Clothing 500
Food 2,000
Entertainment 100
Utility 500
Personal Expense 50
School Fee 700
Cost Sharing 100
Transportation 100
Other 150

Using the above information the candidate is expected to perform the following tasks:

Task 3.1: Develop and Use a Personal Budget

Assume that the Salary income and expenditures will increase by 10% prepare budget plan and
Budget variance for January 2016.

Task 3.2: Developing Personal Budget

Assume that expenditures will increase by 10% and no change in Salary Income, prepare budget
plan for January 2016.

Task 3.3: Developing of Saving Plan

Assume that expenditure of December 2015 remains unchanged in January 2016 and Bilise need
to find other source of income in addition to her salary to have birr 2,000 saving amount in
January 2016. Calculate the additional amount to her salary that Bilise need to finance to reach a
saving of birr 2,000.

Project 03

Develop and Use Personal Budget and Saving Plan

AtoFantahun is a permanent employee of Ethio Construction Company earns monthly net salary
of 9,500 ETB. The monthly personal expenditures as per the following description and the
remaining amount will be deposited to his personal saving account.

1. Clothing ………………………….15%
2. Food and Beverage………………..20%

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 3. Medical…………………………….5%
4. Rent………………………………..20%
5. Transportation……………………..2%
6. Education…………………………..10%

He plans to open Barber Shop with capital of 80,520.00 ETB after one year. As per his business
plan, this capital is covered from annual personal saving account and the remaining from Addis
Saving and Credit Association with 8.5% annual interest rate for three years and the principal
amount will be paid semiannually at equal installment.

Task 3.1: Prepare monthly and annual budget for the year considering that there is no change in
earning and expense in the year.

Task 3.2: Identify the sources of information to develop business plan.

Task 3.3: Determine:

a. Amount of loan from Addis Saving and Credit Association.

b. Amount of principal and interest payment for the first year.
c. Amount of outstanding principal balance at the end of the second year.

Project 04
ORO engineering corporation has signed a road construction agreement contact with Ethiopia
road authority to reward construction the main road from Addis Ababa to Dire Dawa with a
contact amount of 250 million 80% of the contract amount will be financed from the loan
released by commercial bank of Ethiopia at an annual interest rate of 13% to be paid and the paid
as following terms payment.

 At the end of the 1st Year……………………………..10% of principal

 At the end of the 2nd Year………………………….. 20% of the principal
 At the end of the 3rd Year…………………………….30% of the principal
 At the end of the 4th Year…………………………….20% of the principal
 At the end of the 5th Year…………………………….15% of the principal
 At the end of the 6th Year…………………………….5% of the principal

Task 4.1: Determine:

A. Amount of loan from commercial bank of Ethiopia.

B. Amount of principal and interest repayment from the 2nd year.
C. Amount of outstanding balance at the end of the 5th year including interest expense.
D. Total interest of the loan.

Project Three
Personal Budget and Saving

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 The total income of budgetary plan for Megabit 30, 2006 is 3,000. The following information is
given during the month:
S.N Expenses Budgetary Budgetary Actual Variance
rate for the expenditure for budget for budget for the
month of the month of the month of month of
Megabit Megabit Megabit Megabit
1 Food &Groceries 35% 1,000
2 Rent expense 10% 350
3 Transportation 15% 400
4 Clothes &Shoes 10% 250
5 Medical expense 8% 250
6 Laundry 3% 125
7 Utility 5% 150
8 Education expense 5% 200
Saving
Total Budget

Task 3.1: Prepare the budget Expenditure in birr for the expenses incurred during Megabit.
Task 3.2: Prepare the budget Variance.
Task 3.3: Calculate the net saving in birr and saving rate during the month.

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