Estimated Cash Budget

Question: Discusss about the Estimated Cash Budget. Answer: Estimated Cash Budget Particulars July - Sept Oct - Dec Jan - Mar Apr - June Professional Salaries 60,000 80,000 80,000 100,000 Secretarial Wages 30,000 30,000 30,000 30,000 Training 5,000 6,000 3,000 5,000 Office Supplies 5,000 8,000 8,000 8,000 Electricity 1,500 1,200 1,800 1,600 Insurance - - 16,000 - Rent 24,000 26,000 26,000 26,000 Travel 42,000 42,000 28,000 56,000 Estimated Cash Payments 167,500 193,200 192,800 226,600 As per the given question, the cash payments will be done as per the above schedule. Payment of Insurance will be done in the month of January only and hence there will not be any outflow of cash in other quarters. Adjustment in payment schedule has been done as per the given set of rules for different line items. A - Direct Labour Budget Particulars July - Sept Oct - Dec Jan - Mar Apr - June Production 21,000 41,000 41,500 51,000 Labour Hours per unit 3 3 3 3 Total Labour Hours Reqd 52,500 102,500 103,750 127,500 Hourly Rate 18 18 18 18 Total Direct Labour Cost 945,000 1,845,000 1,867,500 2,295,000 The budget schedule drawn above shows the complete picture of direct labour cost. The maximum expense is in last quarter as the production is highest in that quarter. B Factory Overhead Budget Particulars July - Sept Oct - Dec Jan - Mar Apr - June Production 21,000 41,000 41,500 51,000 Labour Hours per unit 3 3 3 3 Total Labour Hours Reqd 52,500 102,500 103,750 127,500 Factory Overhead Fixed Salary 71500 71500 71500 71500 Depreciation 31000 31000 31000 31000 Rent 60000 60000 60000 60000 Variable Indirect Material 183,750 358,750 363,125 446,250 Indirect Labour 136,500 266,500 269,750 331,500 Others 15,750 30,750 31,125 38,250 Total Factory Overhead Budget 498,500 818,500 826,500 978,500 References Nasrollah A,Misty W, (1992) "CASH BUDGETING PRACTICES AND COMPUTER USE BY AUTOMOTIVE DEALERSHIPS",International Journal of Retail Distribution Management, Vol. 20 Iss: 5 Vclav B,Petr D, (2007) "Nonlinear optimisation and rational cash flow",Engineering, Construction and Architectural Management, Vol. 14 Iss: 3, pp.277 292 L. Joshi,Jawahar Alà ¢Ã¢â€š ¬Ã‚ Mudhaki,Wayne G. B, (2003) "Corporate budget planning, control and performance evaluation in Bahrain",Managerial Auditing Journal, Vol. 18 Iss: 9, pp.737 750 Lilià ¢Ã¢â€š ¬Ã‚ Anne Kihn, (2011) "How do controllers and managers interpret budget targets?",Journal of Accounting Organizational Change, Vol. 7 Iss: 3, pp.212 236 Khursheed O,Andre de K,Philip H. S, (1995) "CAPITAL BUDGETING: A FUZZY SET APPROACH FOR DETERMINING EXPECTED VALUE OF CASH FLOWS",Asian Review of Accounting, Vol. 3 Iss: 1, pp.105 - 125