(a)Prepare NiNa plc’s cash budget for the month September 2021. Assume the firm will have a cash balance of £50,000 on 1st of September 2021. (b)Evaluate, along with making appropriate recommendations, NiNa plc’s cash budget for the month of September 2021.
NiNa plc manufactures 1 product; XYZ. It uses materials A and B in
production of XYZ. The Financial Director of Rain plc has asked for your
assistance in producing the
She has provided you with the following information extracted from the
functional budgets:
July August September October
Sales (£) 9,250,000 10,360,000 12,950,000 14,245,000
Production (unit) 50,000 56,000 70,000 77,000
Material A purchase
(£) 1,500,000 1,680,000 2,100,000 2,310,000
Material B purchase
(£) 500,000 560,000 700,000 770,000
Direct labour cost (£) 2,400,000 2,688,000 3,360,000 3,696,000
The following additional information has also been provided to you:
• Sales are 20% cash, 80% credit. Credit sales are paid one month after
the month of sale. NiNa plc allows a 1% cash discount on all of its cash
sales and the firm does not anticipate any
future.
• Payment to material A supplier is made in the month following purchase
and payment to material B supplier is made two months after they are
purchased.
• All of the firm’s direct labour are on zero-hour contracts. Labour rate
per hour is £12.
• Direct labour is paid as they are incurred.
See Next Page
4QQMN502
7
• Variable production overheads are incurred in direct proportion to
number of direct labour hours worked and the rate is £3 per direct
labour hour.
• Fixed production overheads are £700,000 per month and they include
depreciation charges of £50,000.
• Fixed selling and administration overheads are 400,000 per month.
• The firm takes one month’s credit on all its overheads (fixed and
variable).
• The firm is planning to purchase new equipment for £3,800,000 cash in
September 2021.
Required:
(a)Prepare NiNa plc’s cash budget for the month September 2021. Assume
the firm will have a cash balance of £50,000 on 1st of September 2021.
(b)Evaluate, along with making appropriate recommendations, NiNa plc’s
cash budget for the month of September 2021.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)