User Account

All Pages

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

Definition of activities based costing, Definition of Activities based cost...

Definition of Activities based costing Activity based costing is a system that focuses on activities as the fundamental cost objects and uses the costs of these activities as b

Recognition of the organization''s decision, Recognition of the Organizatio...

Recognition of the Organization's Decision Units and Decision Packages ZBB decision unit is an operating division for which decision packages are generated and analyzed. It ca

What is the main purpose of cost centre, Explain the main purpose of cost c...

Explain the main purpose of cost centre The main purpose of cost centre is two fields. 1. Recovery of cost: costs are collected, classified into two field in respect of

Explain zero bases budgeting according to david humdinger, Explain Zero bas...

Explain Zero bases budgeting According to David humdinger According to David humdinger, ZBB is a management tool which provides a systematic method for evaluating all operation

Definition of cost reduction, Definition of Cost reduction Cost reducti...

Definition of Cost reduction Cost reduction is planned positive approach to reducing expenditure. Cost reduction exercises are planned campaigns to cut expenditure. It is a con

Advantages of participatory budgets, Advantages of participatory budgets ...

Advantages of participatory budgets Information from employees most recognizable with each unit’s needs and constraints is included. Knowledge spread amongst numerous lev

Managerial Accounting, Computing equivalents units and assigning costs to c...

Computing equivalents units and assigning costs to completed units and ending work in process; no beginning inventory or cost transferred in (30 -45min) Sue Electronics makes CD p

STANDARD COSTING AND VARIANCES, WHY VARIANCES IS INVESTIGATED UNDER STANDAR...

WHY VARIANCES IS INVESTIGATED UNDER STANDARD COSTING

Prepare an estimation of working capital, Prepare an estimation of working ...

Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000

Managerial accounting, As an MBA Managerial Accounting Student, John has as...

As an MBA Managerial Accounting Student, John has asked you to evaluate the alternatives available and make recommendations as to the best course of action, and present it in a Rep

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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