Selling and administrative expense budget

The variable selling and administrative expenses amount to 4,000 UAH per unit of sale, including commissions, shipping, and supplies.

SCHEDULE 7 ALFA Company - 2010 Factory overhead budget

	Quarter
	1	2	3	4	TOTAL
Budgeted sales in units Variable overhead rate (UAH)
Budgeted variable expense Fixed selling and administrative expenses Advertising Insurance Office salaries Rent Taxes
Total budgeted selling and administrative expenses

The cash budget

Using the data developed in the preceding sections, we can prepare the cash budget.

We assume the following:

1. The company wants to keep a 5,000,000 minimum cash balance at the end of each quarter.

2. All borrowings and repayments must be in multiples of 500,000 UAH at an interest rate of 10% per annum. Interest is computed and paid as the principal is repaid. Borrowing takes place at the beginning and repayments at the end of each quarter.

3. The beginning cash balance of the first quarter is 10,000,000 UAH.

4. A sum of 24,300,000 UAH must be paid in the second quarter for the purchase of machinery.

5. Income tax of 4,000,000 UAH is paid in the first quarter.

SCHEDULE 8 ALFA Company - Cash budget for the year ended Dec. 31 2010

		Quarter
	From Schedule	1	2	3	4	TOTAL
Cash balance, beginning Add receipts Collections from customers	1
Total cash available
Less disbursements Direct materials Direct labor Factory overhead Selling and admin. Machinery purchase Income tax	3 4 5 7 Given Given	4,000	24,300			24,300 4,000
Total disbursements
Cash surplus (deficit)
Financing Borrowings Repayment Interest			8,500	(8,500) (425)		8,500 (8,500) (425)
Total financing			8,500	(8,925)		(425)
Cash balance, ending