Gloves Unlimited is a Ryanair subsidiary that specialises in industrial gloves, some of which are used by Ryanair cabin staff. You are required to prepare a cash budget for Gloves Unlimited for the period January to June, using the information given below. Months Total Sales Materials purchased on credit Wages Production Overheads Overheads: Selling & Distribution January 20,000 20,000 4,000 3,200 800 February 22,000 14,000 4,400 3,300 900 March 28,000 14,000 4,600 3,400 900 April 36,000 22,000 4,600 3,500 1,000 May 30,000 20,000 4,000 3,200 900 June 40,000 25,000 5,000 3,600 1,200 Additional information The cash balance on 1st January was $10,000. Machinery is to be installed @ $20,000 on credit to be paid in two equal instalments in March and April. Sales commission @ 5% on total sales is to be paid one month following the actual sales. $12,000 will be received in March from investments. Period of credit allowed by suppliers is 2 months. Period of credit allowed to customers is one month. Lag in payment of overheads is one month. Lag in payment of wages is half a month. Cash sales are 50% of total sales
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.
Gloves Unlimited is a Ryanair subsidiary that specialises in industrial gloves, some of which are used by Ryanair cabin staff. You are required to prepare a
|
Months |
Total Sales |
Materials purchased on credit |
Wages |
Production |
Overheads: Selling & Distribution |
|
January |
20,000 |
20,000 |
4,000 |
3,200 |
800 |
|
February |
22,000 |
14,000 |
4,400 |
3,300 |
900 |
|
March |
28,000 |
14,000 |
4,600 |
3,400 |
900 |
|
April |
36,000 |
22,000 |
4,600 |
3,500 |
1,000 |
|
May |
30,000 |
20,000 |
4,000 |
3,200 |
900 |
|
June |
40,000 |
25,000 |
5,000 |
3,600 |
1,200 |
Additional information
The cash balance on 1st January was $10,000.
Machinery is to be installed @ $20,000 on credit to be paid in two equal instalments in March and April.
Sales commission @ 5% on total sales is to be paid one month following the actual sales.
$12,000 will be received in March from investments.
Period of credit allowed by suppliers is 2 months.
Period of credit allowed to customers is one month.
Lag in payment of overheads is one month.
Lag in payment of wages is half a month.
Cash sales are 50% of total sales
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