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

Illustrate the techniques used in management accounting, Determine the The ...

Determine the The tools and techniques used in management accounting 1. Financial policy and accounting : every concern has to take a decision about the sources of raising fun

Scorecard, Scorecard The traditional approach to the monitoring organiz...

Scorecard The traditional approach to the monitoring organizational performance has focused on the financial measures and the outcomes. Increasingly, companies are realizing th

Explanation of objectives of budgetary control system, Problem 1 Manage...

Problem 1 Management accounting is sensitive to management needs; however, it assists the management and does not replace it. Write down in detail the scope of management accou

Monitor, Monitor Let's start by having you think about the controlling ...

Monitor Let's start by having you think about the controlling your car (aka "driving")! Your steering, acceleration, and braking are not the random things to be done; they are

Objective function, Objective Function Although the standard LP model c...

Objective Function Although the standard LP model can be either the maximization or the minimization type, it is sometimes useful to convert one form to the other. The maximiz

Operating leverage, How do you compare two companies operating leverage? Mu...

How do you compare two companies operating leverage? Must the sales volume be set the same or the net operating income?

Time series analysis, Conduct a time series analysis base on the three year...

Conduct a time series analysis base on the three years accounting ratios

#titDescribe the "agency problem" and the Sarbanes-Oxleyle.., Discuss the d...

Discuss the dominant compensation philosophy, share value creation and the link between company size and executive pay. Solve Parmalat''s case, which may be found in reading No. 8.

Quantitative or qualitative measures, Review the options and views availabl...

Review the options and views available to answer the following questions: 1. What sort of information is being provided by the dashboard? What visual objects are used?     Wh

State the working capital turnover ratio, State the Working capital turnove...

State the Working capital turnover ratio  Meaning: this ratio establishes a relation ship among net sales and working capital. Working capital turnover ratio shows the vel

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