Analysis of Proposed Monthly Budgets for Kuroki Limited 2020

This report analyzes the proposed monthly budgets for Kuroki Limited from July to December 2020. It begins with an overview of the budgeting process and its importance for management control. The report examines the sales forecast and its impact on the monthly revenue, sales collection, production, materials usage and purchases, and cash flow. The analysis highlights the company's failure to meet its target closing balance and the need for overdraft facilities. The report provides recommendations to improve the budget, including reducing the payment period and focusing on non-financial factors like political and economic conditions. It suggests actions to be taken if the budget is not accepted, emphasizing the need for revised assumptions related to cash outflows from labor wages and overheads. The report concludes with references to supporting literature.

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Author’s Note

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Table of Contents
Recommendations:..............................................................................................................2
B. Non-Financial Factors affecting budget approval:..........................................................2
D. Recommending the actions if budget is not accepted:....................................................3
Referencing..........................................................................................................................4

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Recommendations:
Reducing the number of payment period
The reduction in number of payment period from after the end of month to 15 days would
eventually help in contemplating with the excessive cash outflows of the organization during the
month. Moreover, the company could also initiate 50% of the sales as cash and the rest could be
collected in the following month. This measure could ensure the continuation of the relevant
cash balance and reduce the occurrence of negative balance in the cash account.
B. Non-Financial Factors affecting budget approval:
The company should also focus on non-financial factors while preparing their budget.
The budgeting system needs to consider the factors that rotates around the technical superiority,
economic condition of the country, political condition of the country and even the policies that
governs the business world. These non-financial factors have considerable affects over the
company and its financial health, so before creating the budget it is crucial for the company to
consider the non-financial factors (Butlewski, Misztal and Ciulu 2014). Among all the non-
financial factors, political factors are one of the most prominent factor. Political factors affect the
policies of the country. The change in the political power of a country is directly proportional to
the change in policies. The decisions regarding the tax also depend on the political power of the
country.
The economic condition of the country is also one of the major factors that depend on the
changing political factors. The political factors of the country decide the policies that on the
other hand affects the country’s inflation rate and the import and export policies. These factors
affect the injection of the foreign investment and export of goods. The injection of the foreign

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investment will boost the business world that will also benefit the company’s financial health
(Tailab 2014). The increase in export of goods will assists the country to control their inflation
rate that on the other hand will benefit the company to do business in ease. Thus, while preparing
the budgeting system of the company, the management of the company needs to consider the
political factor.
D. Recommending the actions if budget is not accepted:
The budget could only be rejected on the basis of the actual cash flows condition, as
during Nov and Dec of 2020 the closing cash balance is negative, which forces the organization
to take up overdraft facilities. Hence, changes in the excessive cash outflow from labor wages
and overheads would eventually improve the cashflow balance of the company. Hence, the
budget is required to be reviewed again for removing any kind of inappropriate assumptions
made (Butlewski, Misztal and Ciulu 2014).

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Referencing
Butlewski, M., Misztal, A. and Ciulu, R., 2014, June. Non-financial factors of job satisfaction in
the development of a safety culture based on examples from Poland and Romania.
In International Conference on Digital Human Modeling and Applications in Health, Safety,
Ergonomics and Risk Management (pp. 577-587). Springer, Cham.
Tailab, M., 2014. Analyzing factors effecting profitability of non-financial US firms. Research
Journal of Finance and accounting, 5(22).

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