Scribd
Upload
72 views4 pages

University of Technology, Jamaica: School of Business Administration

This document provides information and instructions for a budgeting project for a university course. Students are given financial and operational details for a company and are required to develop a fully documented Excel budget model covering 12 months. The model must include sales, production, materials, expenses, marketing, and cash budgets. Accuracy, flexibility, and organization of the model will be evaluated. The project is worth 15% of the course grade and is due on April 9, 2009.

Uploaded by

Mickel Alexander
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
72 views4 pages

University of Technology, Jamaica: School of Business Administration

This document provides information and instructions for a budgeting project for a university course. Students are given financial and operational details for a company and are required to develop a fully documented Excel budget model covering 12 months. The model must include sales, production, materials, expenses, marketing, and cash budgets. Accuracy, flexibility, and organization of the model will be evaluated. The project is worth 15% of the course grade and is due on April 9, 2009.

Uploaded by

Mickel Alexander
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 4

1

UNIVERSITY OF TECHNOLOGY, JAMAICA


SCHOOL OF BUSINESS ADMINISTRATION
INTRODUCTION TO MANAGEMENT ACCOUNTING
BUDGETING PROJECT
DUE DATE: APRIL 9, 2009

You are given the following information relating to the budget for the coming year:
Prior Year Balance Sheet

Non-current Assets
Land
Buildings at cost
Accumulated Depreciation

300,000
1,500,000
800,000

Furniture & Fittings


Accumulated Depreciation

180,000
80,000

700,000
100,000
Current assets
Stock
Accounts Receivable
Bank

245,000*
140,000**
50,000
435,000

Current liabilities
Accounts Payable

90,000***

Net Current Assets

345,000

Net Assets

1,445,000

Financed by:
Long-Term Loans
Shareholders Equity
Capital
Retained Earnings
* This amount is made up as follows: Finished Goods
Raw Materials

600,000****
600,000
245,000
1,445,000
500 units @ $90/unit
20,000 lbs @ $10/lb.

= $ 45,000
= $200,000
$245,000

**This amount is to be collected as follows: 90% in one month


10% in two months
*** This amount is to be paid as follows: 50 % in one month
50 % in two months
****This amount is to be paid off over 10 years on a monthly basis in equal installments with an
interest of 10% per annum on the original amount. (Interest also paid on a monthly basis)

Budget Parameters
(1)

Sales
Base sales (sales in January), is to be estimated from the following:
Units
Probability

Best Case
10,000
0.4

Most Likely Case


5,000
0.4

Worst Case
2,000
0.2

Sales in the subsequent months are expected to increase at a rate of 3% each month for
the next thirteen months.
Selling Price is initially set at $500 but a 10% increase in price is to be made in June at
which point the price will remain unchanged over the remaining months in the budget
period.
(2)

Standard Costs- Material

Material (kg)
(3)

Standard
quantity (lbs)
2.5

Standard
Price ($)
10

Standard
Cost/unit ($)
25

Standard
rate ($)
10

Standard
Cost/unit ($)
40

Standard Costs- Labour

Labour (hrs)

Standard
hours
4

(4)

It takes an average of 2 machine hours to produce each unit.

(5)

Standard Costs- Manufacturing Overheads


The production manager is unsure as to how to go about estimating manufacturing
overheads but has compiled the following data relating to prior periods.

(6)

Working Capital Management


(a)

Accounts Receivable Policy


Allow for:
10% of sales to be cash sales
1% of credit sales to be bad
60% of credit sales to be received one (1) month after sale

3
39% of credit sales to be received two (2) months after sale
(b)

Accounts Payable Policy


Allow for:
30% of purchases to be cash purchases
40% of purchases to be paid for one (1) month after purchase
30% of purchases to be paid for two (2) months after purchase

(c)

Closing Inventory Policy


Raw Materials- Should be 15% of the following months usage
Finished Goods Should be 15% of the following months sales

(d)

Bank/Cash Balances Policy

(7)

Cash balances exceeding $50,000 are invested in the stock market at the
end of each month, and is to be carried in the balance sheet as
Investment at cost.
The companys policy is not to keep an overdraft

Administration cost (all fixed)


Accounting/Finance
Human Resources
Information Technology
Legal & Corporate Affairs

$90,000 per month


$40,000 per month
$65,000 per month
$30,000 per month

Roughly 80% of these expenses are paid for in the month incurred and 20% in
the following month.
(8)

Marketing and Distribution Budget (semi-variable)


Sales Promotion
Sales Representative
Sales Administration
Market Research
Distribution

4% of total sales
5 % of total sales + $120,000 per month
$120,000 per month
15% of sales promotion
$0.05 per unit sold + $300,000 per month

All marketing and distribution costs are paid in the month incurred.
(9)

Depreciation
Depreciation should be calculated on a straight line basis at 20% of cost.

(10)

Other Policies
(a) The budget is to be done for each month covering a period of one (1) year from
January to December.
(b) All costs including the variable manufacturing overhead rate should be rounded
off to the nearest dollar

REQUIRED
The information given above should be used to develop an excel workbook containing the
following budgets:
(1) Sales Budget
(2) Schedule of Expected Cash Collections from Accounts Receivable
(3) Production Budget
(4) Materials Budget
(5) Schedule of Expected Cash Payments to Accounts Payable
(6) Direct Labour Budget
(7) Manufacturing Overheads Budget
(8) Administration Budget
(9) Marketing and Distribution Budget
(10) Cost of Sales Budget
(11) Cash Budget

Note:
(1)

This workbook should be fully documented including all assumptions made.

(2)

This project is worth 15% of the overall grade for the course.

(3)

Groups should not exceed five (5) nor should they be less than two (2).

(4)

The assessment of the project is based on the following criteria:

(a) Accuracy

40%

(b) Flexibility (the use of formulas which allow for maximum what-if analysis)

40%

(c) Aesthetics (formatting and organization)

20%
100%

(5) The submission date for this project is April 9, 2009. The soft and hard copy are to
be submitted. The soft copy is to be emailed to the tutor.
(6) Students are expected to communicate with their lecturers/tutors to brief them on their
progress and/or to discuss problems that they have encountered. These interactions must
be on a timely manner and must be initiated by the group.
(7) Students are encouraged to make multiple back-ups as they work to safe-guard
against man-made events and acts of God.
.
(8) We will be watchful for, but do not expect any two projects to be duplicates. In case this
happens, however, the Universitys policy relating to academic misconduct will apply.

You might also like