Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit forecasts for the 6 months of Year 2021 are given below: July $ August $ Sept $ Oct $ Nov $ Dec $ Sales 40000 48000 50000 60000 80000 100000 Cost: 20000 24000 25000 30000 40000 50000 Materials 4000 4800 5000 6000 8000 10000 Wages 17000 18600 19000 21000 25000 29000 Overheads 41000 47400 49000 57000 73000 89000 Profit/(Loss) (1000) 600 1000 3000 7000 11000 5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit. Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month. 75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month. Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month. The company is having a new building constructed and the first instalment of $10,000 will be paid in October. Sales for the last TWO (2) months of first half year 2021 were: May - $60,000 June - $50,000 In June 2021 materials purchased were $25,000. Wages were $5,000 and overheads were $16,000 (including $2,000 depreciation). The expected cash balance at beginning of July 2021 is $1,250. Required: 1. Prepare the Cash Budget for each of the last 6 months of Year 2021. 2. Comment on the cash budget results above.
Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit forecasts for the 6 months of Year 2021 are given below: July $ August $ Sept $ Oct $ Nov $ Dec $ Sales 40000 48000 50000 60000 80000 100000 Cost: 20000 24000 25000 30000 40000 50000 Materials 4000 4800 5000 6000 8000 10000 Wages 17000 18600 19000 21000 25000 29000 Overheads 41000 47400 49000 57000 73000 89000 Profit/(Loss) (1000) 600 1000 3000 7000 11000 5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit. Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month. 75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month. Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month. The company is having a new building constructed and the first instalment of $10,000 will be paid in October. Sales for the last TWO (2) months of first half year 2021 were: May - $60,000 June - $50,000 In June 2021 materials purchased were $25,000. Wages were $5,000 and overheads were $16,000 (including $2,000 depreciation). The expected cash balance at beginning of July 2021 is $1,250. Required: 1. Prepare the Cash Budget for each of the last 6 months of Year 2021. 2. Comment on the cash budget results above.
Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit forecasts for the 6 months of Year 2021 are given below: July $ August $ Sept $ Oct $ Nov $ Dec $ Sales 40000 48000 50000 60000 80000 100000 Cost: 20000 24000 25000 30000 40000 50000 Materials 4000 4800 5000 6000 8000 10000 Wages 17000 18600 19000 21000 25000 29000 Overheads 41000 47400 49000 57000 73000 89000 Profit/(Loss) (1000) 600 1000 3000 7000 11000 5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit. Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month. 75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month. Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month. The company is having a new building constructed and the first instalment of $10,000 will be paid in October. Sales for the last TWO (2) months of first half year 2021 were: May - $60,000 June - $50,000 In June 2021 materials purchased were $25,000. Wages were $5,000 and overheads were $16,000 (including $2,000 depreciation). The expected cash balance at beginning of July 2021 is $1,250. Required: 1. Prepare the Cash Budget for each of the last 6 months of Year 2021. 2. Comment on the cash budget results above.
Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit forecasts for the 6 months of Year 2021 are given below:
July $
August $
Sept $
Oct $
Nov $
Dec $
Sales
40000
48000
50000
60000
80000
100000
Cost:
20000
24000
25000
30000
40000
50000
Materials
4000
4800
5000
6000
8000
10000
Wages
17000
18600
19000
21000
25000
29000
Overheads
41000
47400
49000
57000
73000
89000
Profit/(Loss)
(1000)
600
1000
3000
7000
11000
5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit.
Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month.
75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month.
Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month.
The company is having a new building constructed and the first instalment of $10,000 will be paid in October.
Sales for the last TWO (2) months of first half year 2021 were:
May - $60,000
June - $50,000
In June 2021 materials purchased were $25,000. Wages were
$5,000 and overheads were $16,000 (including $2,000 depreciation).
The expected cash balance at beginning of July 2021 is $1,250.
Required:
1. Prepare the Cash Budget for each of the last 6 months of Year 2021.
2. Comment on the cash budget results above.
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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