Accounting for Managers 4

Question 1 Cash Budget Higlow Manufacture Ltd | Financial Budgets - 2010 | Budgeted Cash Flow Statements | October | Beginning Cash Balance | $62,000.00 | Receipts: | | Estimated cash sales: | | October ($1248,961 × 58%) | 724,397.38 | September ($1,300,000 × 40%) | 520,000.00 | Total estimated cash sales | $1,306,397.38 | Payments: | | Estimated cash payments: | | Direct Material (75,467 ×$4) | 301,868.00 | Direct Labor (22,489 × $14) | 314,846.00 | Variable indirect cost (22,489 × $3) | 67,467.00 | Fixed indirect cost ($199,769 – $90,000) | 109,769.00 | Selling & Administration costs | 300,000.00 | Dividends | 130,000.00 | Total estimated cash payments | $1,223,950.00 | Estimated ending cash balance | $82,447.38 |
Calculations
1. Estimate the October sale
∵ Contribution Margin = Selling price – Variable cost = $49 - (12 + 14 + 3) = $20
∴ The expected quantity of product sale in October:

Fixed Cost + Expected profit Contribution Margin

= (109,769 + 300,000 + 100,000) = 25,484.45 ≈ 25,489 units $20

Total sale = 25,489 × $49 = $1,248,961
Production cost = 25,489 × $29 = $739,181
Total fixed cost = 409,769 + 739,181 = $1,148,950
(Without depreciation)

Finding expected profit total sale – total cost = $1,248,961 - $1,148,950 = $100,011 which is sufficient sales to earn 100,000 before taxes.

2. Estimate the quantity of product manufactured in October:
Finished Good
Beginning balance 17,000
+Produced + ?
-Sold -25,489
=Ending balance =14,000

∴ Produced unit =14,000 – 17,000 + 25,489 = 22,489 units
∴ Used raw material = 22,489 × 3 =67,467 kg

3. Estimate the quantity of raw material purchased in October:
Raw Material
Beginning balance 20,000
+Purchase + ?