Develop an understanding and working knowledge of real-world budget issues.
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Individual task
You must answer all the questions.
When solving problems, you must clearly explain all the steps you are doing, and why are you making those steps.
Show all your workings, a numeric answer is not enough.
You should submit a document in Excel format showing all calculations.
Use one page per answer.
Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
Font: Arial 12,5 pts.
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Submission: Via Moodle (Turnitin).
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It assesses the following learning outcomes:
Develop an understanding and working knowledge of real-world budget issues.
Prepare cash budgets and predicted a pro forma income statement and a pro forma balance sheet.
Cash Budget
Flexible budgeting
Analysis of variances
Assignment:
1.- You have the following monthly budget from a company:
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Direct sales
7.000.000
6.860.000
6.722.800
6.588.344
6.456.577
7.747.893
7.360.498
6.992.473
6.642.849
Sales to distributors
3.000.000
3.120.000
3.244.800
3.179.904
2.119.936
2.035.139
1.953.733
1.875.584
1.800.560
Purchases to local suppliers
3.200.000
3.193.600
3.189.632
3.125.839
2.744.484
3.130.570
2.980.554
2.837.778
2.701.891
Purchases from imports
4.500.000
4.491.000
4.485.420
4.395.712
3.859.431
4.402.364
4.191.404
3.990.626
3.799.534
Direct personnel costs
1.900.000
1.896.200
1.893.844
1.855.967
1.629.537
1.858.776
1.769.704
1.684.931
1.604.248
Indirect personnel costs
25.000
25.000
30.000
20.000
25.000
25.000
25.000
25.000
25.000
Sales department
100.000
35.000
35.000
35.000
35.000
35.000
35.000
35.000
35.000
Sales agent
300.000
299.400
299.028
293.047
257.295
293.491
9.784
266.042
253.302
Administration
20.000
20.000
20.000
20.000
20.000
20.000
20.000
20.000
20.000
Depreciation
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Local non income Taxes
1.000
1.000
1.000
Operating income
-145.000
-80.200
-86.324
-77.318
-94.235
-83.170
182.785
-91.319
-96.566
Prepare a cash forecast considering the following:
Direct sales paid 60 days
Sales to distributors 25% cash, 25% after 30 days, 50% after 60 days.
Local suppliers paid 30 days, import suppliers paid 60 days.
Personnel cost (Direct personnel cost + Indirect personnel cost +Sales department + Administration) and taxes, are paid at the end of the month.
Commissions from sales agent (5%) are paid after receiving full amount from the customers (Direct customers and distributors).
Starting cash January 1st is 60.000€
At the end of December, the company has a loan of 50.000€. The company pays interest every month, based on an annual interest of 12%, (1% per month), calculated in base of the loan balance of the previous month.
Their credit facility has a maximum amount of 200.000€
The company wants to hold a minimum cash balance of 20.000€
Prepare a cash planning.
What is the final cash balance by June 30th.?
What is the total loan balance by June 30th?
(65 points)
2.- Company White Brothers. shows the following data:
You are requested to find deviations between actual and budget for all income statement accounts.
Show deviations in % over budget.(5 points)
Show all Income statement lines aspercentage of Sales.(5 points)
Explain the deviation in sales, and split it between volume variance and price variance.(15 points)
Show income statement per unit for both Budget and actual. (5 points)
Give an explanation for the deviations of the company.(5 points).
Requirements: 2 pages
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