Profi t Planning, Managerial Accounting

Assignment Help:
SK 2 Chapter 10: Master budgeting
Objective
How organisations strive to achieve their financial goals by preparing
a number of budgets that together form an integrated business plan
known as the master budget. This question tests the ability to
prepare the cash budget to anticipate identification of shortages or
surpluses of cash at specific times in the budget period for decision
making.
Marks allocated 25 marks
Jaya Sdn. Bhd. is a wholesaler. The management of Jaya Sdn. Bhd. has been extremely worried
about the company’s cash position over the last few years. In July 2015, they seek your advice
and ask you to prepare a cash budget.
The estimated sales for the six months to December 2015 are as follows:
July August September October November December
Credit Sales ($) 122,000 137,000 142,000 148,000 134,000 126,000
Cash Sales ($) 12,900 14,500 17,700 20,100 15,000 12,600
Cash is received immediately on cash sales. The company allows customers one month’s credit
on sales other than for cash.
Purchase of goods for resale is made on credit. The company receives two months’ credit on
these purchases. The purchases for the six months to December 2015 are as follows:
July August September October November December
Purchases ($) 62,000 58,000 71,000 80,000 54,000 48,000
An inventory check at the end of the last year has revealed $45,000 of inventory, valued at cost,
is considered obsolete. The company is currently negotiating the sale of this inventory for
$9,500 and anticipates payment in November 2015.
Jaya Sdn. Bhd’s manufacturing overheads are estimated to be $12,000 per month. This
includes a charge for depreciation of $2,000 per month. The company takes one month to pay
these expenses.
Selling and distribution expenses are estimated to be $50,400 per year and are incurred evenly
over the year. One month’s credit is taken.
The company is currently negotiating an advertising programme with an agency. The cost will
be $6,300 in November and $7,700 in December. Payment will be made in cash.
In December the company anticipates paying $3,880 tax to Lembaga Hasil Dalam Negeri.
The company has agreed to purchase new stock handling equipment. The cost of $105,200 is
payable in two equal instalments in October and November 2015.
The company expects in December to be able to take advantage of adjacent property (cost of
$150,000) to expand their operation.
It is estimated that the cash balance at 1 October will be $16,000.
Required:
a) Prepare a cash budget for the months of October, November and December 2015.
(18 marks )
b) Write a report on the cash position over this period, and in particular on ways in which you
think it could be improved.

Related Discussions:- Profi t Planning

List the advantages of program based budgeting, Question: (a) "Budgeta...

Question: (a) "Budgetary control comprises two distinct elements - Planning and Control''. ‘'A budget is a statement of what it is reasonable to believe can be made to ha

Functions of the treasury department, The significant functions of a treasu...

The significant functions of a treasury department are as given below: a) Setting up corporate financial goals Financial strategies and aim Treasury and financial po

Letter of credit, In the documentary bills the seller faces a lot of risk a...

In the documentary bills the seller faces a lot of risk as the risk of non-acceptance or non-payment of goods. This poses a main risk for the seller. These additional securities in

Describe breadth indicators and market sentiment indicators, Describe bread...

Describe breadth indicators and market sentiment indicators? 1. Distinguish among technical and fundamental analysis. As well explain essential concepts underlying chart analys

Xs strategy, X's Strategy X will like to divide his play between his ro...

X's Strategy X will like to divide his play between his rows in such a way that his expected winnings or losses when Y plays the first column will be equal to his expected winn

Activity –based techniques, Explains how activity –based techniques can be ...

Explains how activity –based techniques can be used to improve performance

Lock box system, Lock Box System:   In this type of system, the customers a...

Lock Box System:   In this type of system, the customers are advised to mail their payments to a post office box hired through the firm for collection purposes near their region. T

Cost volume profit analysis, tha accountant''s approach to CVP ANALYSIS HAS...

tha accountant''s approach to CVP ANALYSIS HAS BEEN CRITICISED IN THATIT DOES NOT DEAL WITH THE FOLLOWING; CHANGES IN PRODUCT MIX. WHY IS IT SO?

Illustration of coefficient of determination , Illustration of Coefficient ...

Illustration of Coefficient of Determination The production manager of XYZ Company is concerned about the apparent fluctuation in efficiency and wants to determine how labour c

Willco Inc. manufactures electronic parts, Willco Inc. manufactures electro...

Willco Inc. manufactures electronic parts. They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd