Develop and Manage a Budget
Added on 2020-05-08
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DEVELOP AND MANAGEA BUDGET
TABLE OF CONTENTSAssessment Activity 1................................................................................................................1TASK 1 SALES BUDGET........................................................................................................1TASK 2 PURCHASE BUDGET...............................................................................................1TASK 3 EXPENSE BUDGET...................................................................................................1TASK 4 BUDGETED INCOME STATEMENT......................................................................3TASK 5 PRODUCTION BUDGET..........................................................................................4TASK 6 PERFORMANCE REPORT.......................................................................................5Prepare flexible budget...........................................................................................................5ASSESSMENT ACTIVITY 2...................................................................................................5Prepare cash budget................................................................................................................5ASSESSMENT ACTIVITY 3...................................................................................................7Prepare financial budgets.......................................................................................................7Assessment Activity 4................................................................................................................9Question 1 List five pros and cons of the budgeting process.................................................9Question 2 Identify different types of budgets required to run a manufacturing operation.10Question 3 Explain master budget........................................................................................11Question 4 Explain financial risks and also identify strategies to overcome these risks.....11REFERENCES.........................................................................................................................13
ASSESSMENT ACTIVITY 1TASK 1 SALES BUDGETParticularsSydneyMelbourneBrisbaneGold coastAdelaidePerthNo. of sales740680620710550420Average price260220200190180170Sales1924001496001240001349009900071400TASK 2 PURCHASE BUDGETParticularsOctoberNovemberDecemberBudgeted sales120000140000250000Opening inventory144000252000450000Closing inventory252000450000225000Purchase12000-58000475000Working noteParticularsOctoberNovemberDecemberJanuaryBudgeted sales120000140000250000125000Expected sales144000168000300000150000Closing stock2520004500002250001
Figure 1 Purchase budgetTASK 3 EXPENSE BUDGETParticularsAmountVariable expensesTotal variable7725Fixed expensesmanager's salary6000Depreciation of delivery vehicle1000Depreciation of fixtures and fittings1500Stationery1100Rent1000Interest on loan2500General Expenses800Total Fixed Expenses13900Total expenses21625Working noteCalculation of variable ExpensesExpected Sales of month95000Advertising2500Commission1900Cartage950Discount allowed2375Total variable expenses77252
Figure 2 Formula view of total variable cost3
Figure 3 Total expensesTASK 4 BUDGETED INCOME STATEMENTIn the Books of Rhino CleaningFor the three months ended on 31st MarchParticularsAmountSales45000Less: COGSOpening inventory7000Purchases8000Less: closing inventory9000Gross Profit39000Less operating expensesMarketing4900Administration Expenses2500Financial Expenses1200Total operating expenses8600Net profit304004
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