Mamalisa Catering has required you to prepare a cash budget on the basis of following projection: Jan. RM5000 Feb. RM7400 Mar. RM3800 April RM4900 May RM7400 1. The company expects sales of RM6000 for June. The company has observed that 35% of its sales is for cash and that the remaining 65% is collected in the following month. 2. The company’s raw materials cost is 70% of sales. Usually purchases are made 1 month prior to the month of sales and paid cash. Salaries and lease payments are RM2000 and RM3000 respectively. 3. The company plans to make a cash purchase of a new van for RM40000 and sell its unusable assets for RM10000 in April 2010. 4. The company's cash balance as of February 28, 2010 will be RM10,000. Mamalisa Catering has no short term borrowing as of February 28, 2010. The company must have a minimum cash balance of RM15,000 at the beginning of each month. Assume that the interest rate on short-term borrowing is 1.5% per month. Excess cash will be used to retire short-term borrowing (if any).
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.
Mamalisa Catering has required you to prepare a
projection:
Jan. RM5000
Feb. RM7400
Mar. RM3800
April RM4900
May RM7400
1. The company expects sales of RM6000 for June. The company has observed that 35% of its sales is for cash and that the remaining 65% is collected in the following month.
2. The company’s raw materials cost is 70% of sales. Usually purchases are made 1 month prior to the month of sales and paid cash. Salaries and lease payments are RM2000 and RM3000 respectively.
3. The company plans to make a cash purchase of a new van for RM40000 and sell its unusable assets for RM10000 in April 2010.
4. The company's cash balance as of February 28, 2010 will be RM10,000. Mamalisa Catering has no short term borrowing as of February 28, 2010. The company must have a minimum cash balance of RM15,000 at the beginning of each month. Assume that the interest rate on short-term borrowing is 1.5% per month. Excess cash will be used to retire short-term borrowing (if any).
Step by step
Solved in 3 steps with 2 images
