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) |
800 x 4 |
700 x 4 |
900 x 4 |
800 x 4 |
3,200 x 4 |
Budgeted variable expense Fixed selling and administrative expenses Advertising Insurance Office salaries Rent Taxes |
3,200 1,100 2,800 8,500 350 |
2,800 1,100 8,500 350 |
3,600 1,100 8,500 350 1,200 |
3,200 1,100 8,500 350 |
12,800 4,400 2,800 34,000 1,400 1,200 |
Total budgeted selling and administrative expenses |
15,950 |
12,750 |
14,750 |
13,150 |
56,600 |
The cash budget
Using the data developed in the proceeding 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 |
10,000 54,300 |
9,401 57,120 |
5,461 66,080 |
9,106 64,960 |
10,000 242,460 |
Total cash available |
|
64,300 |
66,521 |
71,541 |
74,066 |
252,460 |
Less disbursements Direct materials Direct labor Factory overhead Selling and admin. Machinery purchase Income tax |
3 4 5 7 Given Given |
4,549 19,750 10,650 15,950 4,000 |
4,560 18,000 9,950 12,750 24,300 |
4,860 22,250 11,650 14,750 |
5,113 20,500 10,950 13,150 |
19,082 80,500 43,200 56,600 24,300 4,000 |
Total disbursements |
|
54,899 |
69,560 |
53,510 |
49,713 |
227,682 |
Cash surplus (deficit) |
|
9,401 |
(3,039) |
18,031 |
24,353 |
24,778 |
Financing Borrowings Repayment Interest |
|
|
8,500 |
(8,500) (425) |
|
8,500 (8,500) (425) |
Total financing |
|
|
8,500 |
(8,925) |
|
(425) |
Cash balance, ending |
|
9,401 |
5,461 |
9,106 |
24,353 |
24,353 |