Reference no: EM133088541
Question - Silver Green Sdn Bhd is in the process of preparing cash budget for the first quarter of 2018. The cash balances on 1 January 2018 is expected to be RM13,000. As an Account Executive, you are responsible to take up the task.
The monthly budgeted revenue and costs are as follows:
|
|
November RM
|
December RM
|
January RM
|
February RM
|
March RM
|
|
Sales
|
40,000
|
50,000
|
45,000
|
55,000
|
60,000
|
|
Materials purchased
|
16,000
|
20,000
|
18,000
|
22,000
|
24,000
|
|
Wages and salaries
|
10,000
|
25,000
|
14,500
|
15,500
|
16,000
|
|
Overheads
|
1,800
|
2,000
|
1,900
|
2,100
|
2,200
|
Additional information:
1. Receipts from customers are normally 60% in the month of sale, 25% in the month following the sale and 10% in the second month following the sale. The balance is expected to be uncollectible.
2. 50% of materials purchased are paid for in the month of purchase and the remaining is paid in the following month.
3. Wages and salaries are paid in the month in which they are incurred.
4. RM1,000 of the total overhead per month is for the depreciation on office equipment. There is one month delay in paying the overhead.
5. The company is expected to give donation to charity organisation of RM400 in January.
6. The company will received a dividend of RM3,000 in March.
7. A new office equipment will be purchased in February costing RM10,000. RM5,000 will be paid on delivery, the remaining will be paid in two months installment.
8. It is the company's policy not to hold cash more than RM32,000 in a month. If there is a surplus of cash, the company will invest an amount of RM32,000 in fixed deposit in that particular month. The remaining will be kept as cash balances.
Required -
a) Prepare a cash budget for Silver Green Sdn Bhd for the first quarter of the year ending 31 March 2018.
b) State four (4) factors affecting sales forecast.
c) Outline five (5) benefits of budgeting.