I need a budget, please.
Week 1:
Task 1: Give some examples for the following costs: (2 Mark)
Direct cost
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Indirect cost
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Fixed cost
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Variable cost
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Step cost/Semi variable cost
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Task 4 (2 Mark)
Performance indicators
Rural fire services consist of a number of volunteers who are drawn from the local communities. These volunteers are trained by the State’s fire brigade. They are called upon to assist the permanent staff in case of emergency. Depending on the training and their capability they are provided with protective clothing where the well trained volunteers get a full set of uniform and the beginners get an identifying cap. These volunteers also help in fund raising activities. The money collected goes into funding the unit.
Performance indicators linked to the activities of an organisation are necessary for the organisation to assess its performance. The performance indicators used by commercial organisations are motivated by the need to make a profit for them to survive and provide returns to the investors. The performance indicators for not-for-profit organisations are somewhat different to those of commercial organisations. Not-for-profit organisations are those organisations that provide services for organisation members or for other people but not interested in profits. This is mainly due to the fact that these organisations survive on grants and donations. Examples of such organisation include charities, churches and political parties. Some not-for-profit organisations are substantial organisations such as the International Red Cross that has a large budget and complex operations while others such as local sports teams are run for a local community.
What might be some of the performance indicators used to assess the performance of such units?
You might investigate such a unit or look at other not-for-profit groups and review how they go about measuring performance.
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Task 13: Clarification of budgets and financial plans: (1 Mark)
In a retail environment where floor staff may have scope to vary the price of products sold what
information might the store management need to pass to various sales work groups in respect to
issues such as cost and discounts that might impact on sales budgets being achieved?
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Week 6
Task 22: Part a: Accounts Receivable Collection Schedule and Cash Flow Statement
Part b: Create an EXCEL file and complete the calculations through using formula(3 Mark)
Stock & Co., a manufacturing company, need to produce a cash flow budget as part of an
overdraft application with their bank. The following are some of Stock’s budgeted figures:
Credit sales
$ Purchases
$ Wages
$
November 39 000 26 975 3 185
December 41 600 31 200 3 900
January 23 400 52 650 3 600
February 37 700 53 300 3 470
March 27 300 58 175 3 380
Budgeted cash at bank on 1 January is $5590.
Though credit terms of sale are payment by the end of the month following the month of supply, Stock & Co. can expect half of the sales to be paid on the due date, with the other half being paid during the following month. Creditors are paid during the month following the month of supply. Wages are paid in the month they are owed.
Utilising the following tables for format, prepare a cash budget for the quarter 1 January to 31 March 20XX.
Workings:
Accounts Receivable Collection Schedule
January February March
Receipts from sales in: $ $ $
November
December
January
February
TOTAL COLLECTIONS
Cash flow plan
January February March
$ $ $
Balance b/fwd.
Cash receipts (from credit sales)
Total Funds Available
Payments
Accounts Payable
Wages
Total Payments
Balance c/fwd.
What went wrong?
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What are the consequences of those wrongs?
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What managerial actions can be taken to rectify the errors?
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What organisational protocols should be followed for reporting if loss is inevitable?
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What support can be provided to the team members to ensure that proper management of finances is in action?
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Task 23: Asset Management - Managerial Decisions (1 Mark)
You are the owner of a small business. In the new financial year you are planning for business expansion. As part of that you are required to acquire new equipment and IT equipment to increase your production level. You have approached this issue to your Chief Financial Officer (CFO). CFO advised that there are three options available to acquire new equipment: Buying, leasing or hire purchase. All have some advantages along with disadvantages. Identify the advantage and disadvantages of them and recommend which one is preferable if you are to buy new IT equipment.
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Week 7:
Task 24: Cash flow analysis – Managerial Decision: Metropolitan Furniture (4 Mark)
Peter works in the accounts unit of the Metropolitan Furniture Manufacturing. He was asked to prepare a prop101028osed budget for the forthcoming quarter. He consults with the sales manager and finds that:
Estimated sales are as follows:
February : $265,000
March : $255,000
April : $290,000
May : $250,000
June : $280,000
In consultation with the production manager he estimates that the cost of goods sold is to be budgeted at 40% of the sales figure. The salaries are expected to be $75,000 per month. When sales exceed $270,000 in any one month, the sales team is entitled to an additional 4% commission on the excess sales over this figure. Other expenses are estimated to be $25,000 per month.
The owner of the organisation is concerned about the cash flow which was not thought of before. The owner is of the opinion that the collection of cash from sales is slow and this could possibly lead to cash flow problems to the organisation. As Peter has never forecasted cash flow before he sets about collecting information on this.
Peter estimates that 70% of the total sales are going to be cash sales where the bill is settled when the goods are purchased or delivered. 20% of the month’s sales) settle the accounts owed in the month following sales. Others (i.e. 10% of the month’s sales) settle in the month after.
Additional information for Cash Flow Statement:
The organisation gets a month’s credit on its purchases. That is, the accounts for the purchases (COGS) made in one month is settled in the following month.
All salaries are paid in the month as they are incurred.
The additional commission is paid in the month after the month in which it was earned.
Other expenses are paid in the month they were incurred.
The bank balance at the beginning of the first month is estimated to be $30 000.
Required:

1. Show the profit and loss calculations for April, May and June of operations.
2. Show the cash flow projection calculations for April, May and June.
3. Show amended figures if sales were to increase by 10% in each month and the cost of goods fell from 40% to 35% through a better long-term purchasing agreement with the supplier.
4. Does Peter need to suggest any contingency plan at this stage?
Workings:
Profit and Loss calculations
April May June
$ $ $
Sales
Less Cost of Goods Sold (COGS)
Gross Profit
Sales Salaries
Commission
Other expenses
Total expenses
Net Profit
Cash flow projections
April May June
$ $ $
Opening Cash
Plus cash in:
This month
From last month
From two months ago
Total Cash available
less cash out:
salaries
Commission
Other expenses
COGS
Total cash out
Closing cash balance
Amended Profit and Loss calculations
April May June
$ $ $
Sales
Less Cost of Goods Sold
Gross Profit
Sales Salaries
Commission
Other expenses
Total expenses
Net Profit
Amended Cash flow projections
April May June
$ $ $
Opening Cash
Plus cash in:
This month
From last month
From two months ago
Total Cash available
less cash out:
Salaries
Commission
Other expenses
COGS
Total cash out
Closing cash balance
Task 25: Constructing a Cash Flow Statement (1 Mark)
Constructing a Cash flow statement:
Calculate the total cash inflows and cash outflows and the net cash position at the end of December from the following information:
Use the space provided and shows all line items.
XYZ Pty Ltd.
December 2014
Particulars Amount ($)
Cash receipts from customers 235,000
Cash paid to suppliers and employees 121,570
Interest paid 34,120
Income tax paid 29,910
Purchase of Subsidiary X, net of cash acquired 550000
Purchase of property, plant and equipment 450,100
Proceeds from sale of equipment 20,000
Interest received 12,550
Dividends received 35,654
Proceeds from issue of share capital 250,000
Proceeds from long-term borrowings 250,000
Payment of finance lease liabilities 90,000
Dividends paid 135,700
Cash and cash equivalents at beginning of period 430,750
Answer Template:
Particulars $ $

Task 26: General knowledge: Manage your business cash flow (3 Mark)
Read the following statements and write if you agree or disagree with the statements. Your analysis must be supported by argument.
1. The purpose of cash flow planning is to ensure that the cash balance is enough to meet current and future financial requirements.
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2. When preparing a cash flow budget you will need to:
A estimate cash outflows for the period.
B estimate cash inflows for the period.
C estimate the future cash position of the business.
D do all of the above.
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3. The cash flow equation is as follows.
Beginning cash balance + estimated sales - estimated purchases = ending cash balance
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4. The sales forecast is not important in the preparation of the cash flow budget.
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5. In a retail business the largest cash outflow is generally the cost of goods to be sold?
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6. After the financial plan is developed and implemented, it is important to communicate and distribute it to the relevant people to satisfy the legal requirements. List some examples of relevant people. Explain why it is critical.
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7. “It is critical to obtain accountant/financial planner’s advice to profitably operate and extend the business in accordance with the business plan” - Explain
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Task 27: Petty Cash (2 Mark)
Required:
Prepare the Pretty Cash Book for the month of January by:
1. Recording the establishment of the petty cash float in the Petty Cash Book
2. Recording the payment vouchers in the Petty Cash Book
3. Balancing the Petty Cash Book on the dates indicated
4. Recording the reimbursement cheques in the Petty Cash Book