QUESTION 3 Prepare the Cash Budget for a project of Zao Enterprises for the period 01 June to 31 August 2021. INFORMATION The following budgeted information was supplied by Zao Enterpises for one of its projects: 1. A favourable bank balance of R50 000 is expected on 31 May 2021. 2. Expected monthly sales are as follows: Units May 4 200 June 6 300 July 6 600 August 5 400 The selling price is R160 per unit. All units produced are sold in the same month. Cash sales usually make up 60% of the total sales. The balance of the sales is on credit. Twenty percent (20%) of the debts are usually settled in the month of the sale for a 5% discount and the balance is collected in the month after the sale. 3. 4. Material purchases are expected to be as follows:
QUESTION 3 Prepare the Cash Budget for a project of Zao Enterprises for the period 01 June to 31 August 2021. INFORMATION The following budgeted information was supplied by Zao Enterpises for one of its projects: 1. A favourable bank balance of R50 000 is expected on 31 May 2021. 2. Expected monthly sales are as follows: Units May 4 200 June 6 300 July 6 600 August 5 400 The selling price is R160 per unit. All units produced are sold in the same month. Cash sales usually make up 60% of the total sales. The balance of the sales is on credit. Twenty percent (20%) of the debts are usually settled in the month of the sale for a 5% discount and the balance is collected in the month after the sale. 3. 4. Material purchases are expected to be as follows:
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.
Question
Transcribed Image Text:QUESTION 3
Prepare the Cash Budget for a project of Zao Enterprises for the period 01 June to 31 August 2021.
INFORMATION
The following budgeted information was supplied by Zao Enterpises for one of its projects:
1.
A favourable bank balance of R50 000 is expected on 31 May 2021.
2.
Expected monthly sales are as follows:
Units
May
4 200
June
6 300
July
6 600
August
5 400
The selling price is R160 per unit. All units produced are sold in the same month.
3.
Cash sales usually make up 60% of the total sales. The balance of the sales is on credit. Twenty percent (20%) of
the debts are usually settled in the month of the sale for a 5% discount and the balance is collected in the month
after the sale.
4.
Material purchases are expected to be as follows:
Transcribed Image Text:R
May
260 000
June
320 000
July
340 000
August
290 000
Forty percent (40%) of the material purchases are for cash and a 10% cash discount is granted on these
purchases. The balance is purchased on credit and is paid in the month after the purchase.
Labour costs amount to R40 per unit and are paid in the month in which they are incurred.
5.
Manufacturing overheads are budgeted at R60 000 per month, of which R5 000 is depreciation on machinery.
Manufacturing overheads are payable in the month in which they are incurred.
6.
Selling and administrative costs contain a fixed portion of R50 000 per month and a variable component of 20% of
the monthly sales value (before any discounts allowed). These costs are paid by the end of the applicable month.
7.
8.
Equipment with a cost price of R400 000 is to be purchased during June 2021. A deposit of 20% of the purchase
price will be paid in the month of the purchase and the balance plus finance charges of R16 000 will be paid in
twelve equal monthly instalments commencing July 2021.
Ten percent (10%) of the sales value in excess of R600 000 will be invested monthly from July 2021.
9.
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