A company has a cash balance of $75,000 at the beginning of March and having regard to the following information. i. Creditors give 1-month credit Salaries are paid in the current month ii. Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month iii. Variable overheads are paid two months in arrears iv. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts. Month January February March April May April May January February March B. Cash Sales $ Salaries $ 20,000 22,000 25,000 9,000 9,000 9,500 9,500 10,000 Credit Sales $ Fixed Overheads $ You are required to: A. Prepare the Cash Budget for March, April and May. 74,000 82,000 80,000 90,000 100,000 30,000 30,000 30,000 32,000 32,000 Purchases $ 55,200 61,200 60,000 69,000 75,000 Variable Overhead $ 45,000 50,000 55,000 60,000 70,000 An important goal of the management control system is to motivate employees to work in the best interest of the organisation. Explain TWO (2) important reasons for evaluating performance, stating how they impact goal congruence and employee effort.
A company has a cash balance of $75,000 at the beginning of March and having regard to the following information. i. Creditors give 1-month credit Salaries are paid in the current month ii. Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month iii. Variable overheads are paid two months in arrears iv. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts. Month January February March April May April May January February March B. Cash Sales $ Salaries $ 20,000 22,000 25,000 9,000 9,000 9,500 9,500 10,000 Credit Sales $ Fixed Overheads $ You are required to: A. Prepare the Cash Budget for March, April and May. 74,000 82,000 80,000 90,000 100,000 30,000 30,000 30,000 32,000 32,000 Purchases $ 55,200 61,200 60,000 69,000 75,000 Variable Overhead $ 45,000 50,000 55,000 60,000 70,000 An important goal of the management control system is to motivate employees to work in the best interest of the organisation. Explain TWO (2) important reasons for evaluating performance, stating how they impact goal congruence and employee effort.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:A company has a cash balance of $75,000 at the beginning of March and having regard to the
following information.
i. Creditors give 1-month credit Salaries are paid in the current month
ii. Fixed overheads are paid one month in arrears and include a charge for depreciation
of $5,000 per month
iii. Variable overheads are paid two months in arrears
iv. Credit sales are settled as follows: 40% in the month of sale, 45% in the next month
and 12% in the following month. The balance represents bad debts.
Month
January
February
March
April
May
January
February
March
April
May
B.
Cash Sales
$
Salaries
$
20,000
22,000
25,000
9,000
9,000
9,500
9,500
10,000
Credit Sales
$
Fixed Overheads
$
You are required to:
A. Prepare the Cash Budget for March, April and May.
74,000
82,000
80,000
90,000
100,000
30,000
30,000
30,000
32,000
32,000
Purchases
$
55,200
61,200
60,000
69,000
75,000
Variable Overhead
$
45,000
50,000
55,000
60,000
70,000
An important goal of the management control system is to motivate employees to work in the
best interest of the organisation.
Explain TWO (2) important reasons for evaluating performance, stating how they impact
goal congruence and employee effort.
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