Assignment-3 Case Solution
Calculate the Budgeted Cash Collections for November 2016.
|In the Month of sales||$ 108,000||$ 132,000||$ 120,000|
|One month after sale||-||$ 63,000||$ 77,000|
|Two months after sale||-||-||$ 9,000|
|Total Cash Collected||$ 108,000||$ 195,000||$ 206,000|
1) Do you agree with the consultant’s comments? Why or why not?
Yes, I do agree with the Consultants Comments that effective budget planning and development process could be the key to the success of a business in the volatile market. As budgeting could enable the management of the organization implementing it, to have better control over their money.Furthermore, effective budgeting could allow the management to forecast the sales and cost of sales associated with the business. Which would allow them to appropriately set the prices of their products based on the cost of sales forecast. Moreover, an effective budget enable the management to evaluate the performance of their organization based on the estimation madein its budgets.Therefore, it can be determined that, the three above mentioned perceived benefits of the budgeting were sufficient enough to justify the cost of implementing it within the organization. As it could provide key insight to management with respect to the issues that would be faced the organization in its future operations.
2) Budgeting usually begins with the Sales forecast. Since this is a critical first step in the process, identify at least two (2) factors that you should consider when preparing Sales forecasts.
Forecasting sales in the critical first step in the budgeting process therefore, the management team could consider two factors while preparing the sales budget. The first factors to consider is the market sales growth rate, which exhibits the amount of annual growth in the sales over the period of operation based on the demand and market volatility. Secondly, the budget preparation team should consider the selling price of its products, as it could significant impact the sales forecast by increasing or decreasing it in the future. Hence, these two factor should be considered while preparing the budget of a company. As it would enable the management of the organization to make appropriate forecasts regarding its sales in the future, better positioning itself in the highly diverse and competitive landscape.
What is the total cost of Job 1A54?
How many units must be produced during the month?
|Forecasted Sales units||12,000|
|Add: Closing Inventory||2,000|
|Total Production required||14,000|
|Less: Opening Inventory||(2,000)|
|Units to be Produced||12,000|
What would be the budgeted Production for August?
|Units to be sold||30,000||40,000||60,000||50,000|
|Add: Closing Inventory||8,000||12,000||10,000||-|
|Total Production required||38,000||52,000||70,000||50,000|
|Less: Opening Inventory||-||(8,000)||(12,000)||(10,000)|
a) What would be the expected Cash Collections from customers during April?
|Cash collection (a)||January||February||March||April|
|In the Month of sale||72,000||60,000||78,000||90,000|
|one month after Sale||36,000||30,000||39,000|
|Two Months after sale||9,600||8,000|
|Total Cash collected||72,000||96,000||117,600||137,000|
b) What would be the expected Cash Disbursements during April for Inventory purchases?
|Cash Disbursement (b)||January||February||March||April|
|Discount Availed @3%||(1,800)||(2,340)||(2,700)|
|Total Cash Disbursement||60,000||76,200||87,660||97,300|
c) What would be the expected Cash Disbursements during April for Operating Expenses?
|Cash Disbursement (c)||April|
|Total Operating Cash disbursement||30,000|
d) What would be the expected Cash Balance on April 30?
|Expected Cash balance (d)||April|
|Operating Cash Disbursement||30,000|
|Cash balance at the end of the Month||44,700|
Compute the following items for the company's monthly production report using the weighted average method:
a) The Equivalent Units (EUs) of production for materials.
|Completed and transferred||30,000||30,000||30,000|
|Ending WIP November 30||8,000||8,000||2,400|
|Equivalent Units of Production||38,000||32,400|
b) The Cost per Equivalent unit for conversion.
|Cost of November||Material||Conversions|
|Opening WIP November 1||34,500||9,720|
|Added during the month||146,000||194,400|
|Cost Per Equivalent Units||$ 4.75||$ 6.30|