1. Prepare a Cash budget from March to June based on the following information: Cash balance at end of March = Rs. 200000 Sales in January = 1000 units and expected to increase by 1000 units per month in the first 3 months and thereafter by 1500 units per month Selling price = Rs. 100 per units and is fixed after adding 20% to cost Cash sales are 25% of total sales Cash Purchases are 20% of total purchases 2% of Accounts Receivables are bad debt losses, 50% of good accounts receivables are collected in the month following sales and the rest in the next month 50% of credit purchases are paid in one month following purchases and the remaining in the second month No stock remains at end of the month Time lag in payment of wages is one-fourth of a month and that of Administrative expenses is half a month (Rs.) Jan Feb Mar Apr May June Wages 15000 20000 25000 28000 32000 36000 Administrative expenses (excluding depreciation) 18000 22000 26000 30000 34000 38000 Selling & Distribution expenses 18000 24000 35000 40000 45000 50000
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
1. Prepare a
Cash balance at end of March = Rs. 200000
Sales in January = 1000 units and expected to increase by 1000 units per month in the first 3 months and thereafter by 1500 units per month
Selling price = Rs. 100 per units and is fixed after adding 20% to cost
Cash sales are 25% of total sales
Cash Purchases are 20% of total purchases
2% of
50% of credit purchases are paid in one month following purchases and the remaining in the second month
No stock remains at end of the month
Time lag in payment of wages is one-fourth of a month and that of Administrative expenses is half a month
|
(Rs.) |
Jan |
Feb |
Mar |
Apr |
May |
June |
|
Wages |
15000 |
20000 |
25000 |
28000 |
32000 |
36000 |
|
Administrative expenses (excluding |
18000 |
22000 |
26000 |
30000 |
34000 |
38000 |
|
Selling & Distribution expenses |
18000 |
24000 |
35000 |
40000 |
45000 |
50000 |
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