Submitted to: Prof.

Adeel Salam Shaikh

submitted by: Hassan
bin Tahir
(F2020314010)
Managerial accounting
Cherat Packaging LTD
Contents
Preface........................................................................................................................................................3
Acknowledgement.......................................................................................................................................4
INTRODUCTION TO THE REPORT.................................................................................................................5
Schedule 1...................................................................................................................................................6
Sales Budget................................................................................................................................................6
Schedule 2...................................................................................................................................................6
Production Budget.......................................................................................................................................6
Schedule 3...................................................................................................................................................7
Direct Material Budget................................................................................................................................7
Schedule 4...................................................................................................................................................8
Direct Labour Budget...................................................................................................................................8
Schedule 5...................................................................................................................................................9
Selling, admin and general expenses.........................................................................................................10
Schedule 7.................................................................................................................................................12
Cash receipts.............................................................................................................................................12
Manufacturing Overhead Budget..............................................................................................................10
Schedule 8.................................................................................................................................................13
Cash Disbursement....................................................................................................................................13
Schedule 9.................................................................................................................................................14
Cash Budget...............................................................................................................................................14
Schedule 10...............................................................................................................................................15
Cost of goods sold and cost of goods manufacture...................................................................................15
Schedule 11...............................................................................................................................................16
Income statement.....................................................................................................................................16
Schedule 12...............................................................................................................................................18
Balance sheet............................................................................................................................................18
Schedule 13...............................................................................................................................................20
Cash Flows.................................................................................................................................................20
Bibliography...............................................................................................................................................21
Preface
Forecasting is a key aspect of financial planning and budgeting
in any organization. It involves using various tools and
techniques to predict future financial performance, including
revenue, expenses, and cash flow. In this project, I focused on
forecasting the financial statements of Cherat packaging
limited as well as other schedules related to production and
manufacturing.

By completing this project, I am able to gain a deeper

understanding of how forecasting can be used to assess the long-
term viability or value of an activity, control cash flow, and
identify financial problem areas. I also learned how to use
forecasting as a tool for contingency planning during
challenging financial times, which is essential for helping
organizations navigate uncertain economic conditions. Overall,
this project likely helped me to develop valuable skills and
knowledge that will be useful in your future career as an
accountant or financial analyst.
Acknowledgement
I am deeply grateful to my respected teacher, Adeel Salam
Shaikh for providing me the opportunity to work on this
forecasting project as part of my studies in accounting and
finance. His guidance and support were invaluable in helping me
gain a deeper understanding of the concepts and tools involved
in forecasting.

I would like to acknowledge the invaluable contributions of all

those who contributed to the completion of this project,
including my friends who offered their insights and expertise.
Your contributions have been invaluable in helping me to
develop my skills and knowledge in the field of accounting and
finance. Thank you all for your support
INTRODUCTION TO THE
REPORT
Cherat packaging limited started production with one tuber and
one bottomer having installed capacity of 50 million paper sacks
per annum in 1992. In 1996 they installed second bottomer for
the production line. Cherat packaging limited is a largest
producer and supplier of packaging material to the cement
industry in Pakistan.It has an ISO 9001:2008 certification, also
got many awards like Karachi Stock Exchange Management
Association of Pakistan’s Best Company Award. CPL has an
annual production capacity of 265 million paper bags and 195
million polypropylene (PP) bags which is based on specific
requirements of the customer. They produces various varieties
of superior quality cement bags using best quality raw
materials.CPL is the only company in Pakistan, and in the
region, to produce and supply both varieties of cement bags i.e.
bags made from Kraft paper and polypropylene granules.
Schedule 1
Sales Budget
Bags
Quarter
1st 2nd 3rd 4th Year
Sales in units 69.96 78.35 78.17 78.75 305.24
Units sale price 34,073.95 34,073.95 34,073.95 34,073.95 34,073.95
Total sales revenue 2,383,808.58 2,669,824.01 2,663,583.67 2,683,344.74 10,400,561.00

Flexible Packaging
Quarter
1st 2nd 3rd 4th Year
Sales in units 1.42 1.59 1.59 1.57 6.21
Units sale price 543,619.45 543,619.45 543,619.45 543,619.45 543,619.45
Total sales revenue 773,950.32 866,810.85 864,784.80 850,940.14 3,376,746.60

In this sales budget we are doing our sales according to the trend we determine of our company.
According to the rate of growth of our company.
We apply 6% growth rate on our previous year trend and increase our sales
We find our rate per unit which is 34073.95 and for flexible packing we apply the 543619.45.
Price is set according to the inflation rate 15%.
Schedule 2
Production Budget
Bags
Quarter
1st 2nd 3rd 4th Year
Sales in units (from schedule 1) 69.96 78.35 78.17 78.75 305.24
Add desired ending inventory of finished goods 7.84 7.82 7.88 7.00
Total units required 77.80 86.17 86.05 85.75 335.76
Less expected beginning inventory of finished goods 7.00 7.84 7.82 7.88 7.00
Units to be produced 70.80 78.34 78.23 77.87 328.76

Flexible Packaging
Quarter
1st 2nd 3rd 4th Year
Sales in units (from schedule 1) 1.42 1.59 1.59 1.57 6.21
Add desired ending inventory of finished goods 0 0 0 0 0
Total units required 1.42 1.59 1.59 1.57 6.21
Less expected beginning inventory of finished goods 0 0 0 0 0
Units to be produced 1.42 1.59 1.59 1.57 6.21

In this budget sales are come from the previous budget and we added the beginning inventory according
to the ending inventory per quarter.
Now we have total units required for production then we subtracted the expected beginning inventory
In desire inventory we made the 10% of the next quarter inventory to follow the production.
For the packing we do not have and beginning and ending inventory and we found the units to be
produced per quarter and for the whole year.
Schedule 3
Direct Material Budget
Bags
Quarter
1st 2nd 3rd 4th Year

Bags to be produced (from schedule 2) 70.80 78.34 78.23 77.87 328.76

Raw Material Cost Per Million Bags 24756.7 24756.7 24756.7 24756.7 24756.7
Total Cost Of Raw Material 1,752,756.00 1,939,328.73 1,936,683.92 1,927,842.68 8,139,074.93

Flexible Packaging
Quarter
1st 2nd 3rd 4th Year
Flexible Packaging to be produced (from schedule
2) 1.42 1.59 1.59 1.57 6.21
Raw Material Cost Per Million Bags 399155.39 399155.39 399155.39 399155.39 399155.39
Total Cost Of Raw Material 568,277.02 636,460.34 634,972.71 624,807.19 2,479,393.62

Coming to the raw material of Bags we have units to be produced and we find that the cost per million
bags is 24756.7
We multiply our cost per unit of raw material to the units to be produced we found the Total cost of raw
material.

In flexible packaging we have units to be produced and to find the total raw material cost we will
multiply the cost of per unit price of raw material to units so we found the total raw material cost of
packing.
Schedule 4
Direct Labour Budget
Bags
Quarter
1st 2nd 3rd 4th Year
Units To Be Produced 70.80 78.34 78.23 77.87 328.76
Direct Labour Cost Per Million Bags 1843 1843 1843 1843 1843
Total Cost Of Direct Labour 130,483.03 144,372.35 144,175.45 143,517.27 605,909.31

Flexible Packaging
Quarter
1st 2nd 3rd 4th Year
Units To Be Produced 1.42 1.59 1.59 1.57 6.21
Direct Labour Cost Per Million Bags 29688 29688 29688 29688 29688
Total Cost Of Direct Labour 42,266.77 47,338.04 47,227.40 46,471.32 184,409.98

In this budget we have to find that the Total cost of Direct Labour for which wechecked our company
policy and wages of the workers we apply the inflation rate and divide it to the total production units.

Schedule 5
Manufacturing Overhead Budget
 Quarter
1st 2nd 3rd 4th Year
Stores, spare parts and loose tools consumed 78540.18456 87963.63602 87758.03344 88409.10827 342670.9623
Fuel and Power 130100.8331 145710.6625 145370.0844 146448.5817 567630.1618
Packing Charges 64138.49896 71833.99949 71666.09766 72197.78679 279836.3829
Rents, Rates and Taxes 2045.417781 2045.417781 2045.417781 2045.417781 8181.671126
Repairs and Maintenance 3071.983498 3440.567905 3432.526063 3457.991895 13403.06936
Depreciation 98046.27276 98046.27276 98046.27276 98046.27276 392185.091

Insurance 12658.73134 12658.73134 12658.73134 12658.73134 50634.92537

General Expenses 837.9346646 837.9346646 837.9346646 837.9346646 3351.738658
Vehicle Running Expenses 7142.444328 7999.412997 7980.715499 8039.924243 31162.49707
Travelling Conveyance 4376.098094 4901.153494 4889.69774 4925.974294 19092.92362
Communication Expenses 1122.048776 1122.048776 1122.048776 1122.048776 4488.195103
Printing and Stationery 537.0028963 537.0028963 537.0028963 537.0028963 2148.011585
Legal and Professional Charges 3354.05637 3354.05637 3354.05637 3354.05637 13416.22548
Freight and Cartage 1540.000533 1540.000533 1540.000533 1540.000533 6160.00213
Subscription 1864.076368 1864.076368 1864.076368 1864.076368 7456.305472
Stores and Spare Parts Written Off 6.52006875 6.52006875 6.52006875 6.52006875 26.080275
Others 1261.679801 1261.679801 1261.679801 1261.679801 5046.719202
Total Overhead Expenses 410643.7839 445123.1738 444370.8962 446753.1086 1746890.962
Less depreciation 98046.27276 98046.27276 98046.27276 98046.27276 392185.091
cash for overhead 312597.5111 347076.901 346324.6234 348706.8358 1354705.871

In this budget we separated the fixed and variable costs we applied the
inflation rate on the fixed costs and divide it on 4 so we found per
quarter cost
For the variable cost we put the growth rate of the company on the
variable cost and we apply it according to the quarters ratio and find
the per quarter cost.
Schedule 6
Selling, admin and general expenses
This budget has similar calculations to manufacturing overhead budget.
We recognize fixed and variable
Costs and use inflation and growth rate respectively to calculate for this
year. For depreciation we use depreciation rates for both
manufacturing and admin budget. And based on percentages of total
depreciation in both budgets we get depreciation for this year.
 Selling, General, and Administrative (SG&A) Budget
Quarter
1st 2nd 3rd 4th Year
Administrative costs
Salaries and benefits 20966.8 20966.8 20966.8 20966.8 83867.2
Directors fee 943 943 943 943 3772
Travelling and conveyance 165.6 165.6 165.6 165.6 662.4
Vehicle running expenses 804.657024 901.2018 899.0954 905.7658 3510.72
Communication expenses 1002.225 1002.225 1002.225 1002.225 4008.9
Priniting and stationery 566.95 566.95 566.95 566.95 2267.8
Rent, Rates and taxes 444.1875 444.1875 444.1875 444.1875 1776.75
Legal and professional charges 1741.1 1741.1 1741.1 1741.1 6964.4
Insurance 1494.425 1494.425 1494.425 1494.425 5977.7
Subscription 882.9125 882.9125 882.9125 882.9125 3531.65
Advertisement 89.125 89.125 89.125 89.125 356.5
Depreciation 730.4360674 730.4361 730.4361 730.4361 2921.74427

Repair and maintainence 65.2625 65.2625 65.2625 65.2625 261.05

General office expenses 279.45 279.45 279.45 279.45 1117.8
Utilities 97.175 97.175 97.175 97.175 388.7
Others 5.4625 5.4625 5.4625 5.4625 21.85
Total 30278.76809 30375.31 30373.21 30379.88 121407.1643
DISTRIBUTION COSTS
Salaries and benefits 18011.3 18011.3 18011.3 18011.3 72,045
Travelling and conveyance 502.2625 502.2625 502.2625 502.2625 2,009
Vehicle running expenses 1169.55 1169.55 1169.55 1169.55 4,678
Repair and maintenance 61.525 61.525 61.525 61.525 246.1
Communication expenses 548.55 548.55 548.55 548.55 2,194
Rent, rates and taxes 494.5 494.5 494.5 494.5 1,978
Insurance 683.1 683.1 683.1 683.1 2,732
Printing and stationery 29.6125 29.6125 29.6125 29.6125 118.45
Depreciation 2220.695302 2220.695 2220.695 2220.695 8,883
Freight and cartage 27172.775 27172.78 27172.78 27172.78 108,691
Export expenses 2796.8 2796.8 2796.8 2796.8 11,187
Others 2381.075 2381.075 2381.075 2381.075 9,524
Total 56071.7453 56071.75 56071.75 56071.75 224286.9812
OTHER EXPENSES
Auditors’ remuneration 957.0875 957.0875 957.0875 957.0875 3,828
Donations 360.8125 360.8125 360.8125 360.8125 1,443
Allowance for Expected Credit Loss 0 0 0 0 0
Workers’ Profits Participation Fund 18448.5875 18448.59 18448.59 18448.59 73,794
Workers’ Welfare Fund 5948.6625 5948.663 5948.663 5948.663 23,795
Exchange loss 0 0 0 0 0
Total 25715.15 25715.15 25715.15 25715.15 102860.6
Schedule 7
Cash receipts
Cash Receipts
Quarter
1st 2nd 3rd 4th Year
Sales Revenue (from schedule 1) 3157759 3536635 3528368 3534285 13777308
collection in quarter of sales 2463052 2758575 2752127 2756742 10730497
78% of revenue
Collections in quarter following sale 2254 631551.8 707327 705673.7 2046806
20% of revenue
Total cash receipts 5623065 6926762 6987823 6996701 26554611
Bad debts
Uncollectible account 63155.18 70732.7 70567.37 70685.7 275546.2
2% of revenue

In this budget we are doing the collections we receive the 78% of the
collection in the same quarter and 20% of the collection of the same
quarter are on the following quarter
Uncollectible accounts are 2% of the same quarter which we have
doubt not to be received ever.
Schedule 8
Cash Disbursement
Cash Disbursements
Quarter Year
quarter 1 quarter 2 qaurter 3 quarter 4
Raw material purchases 2321033.015 2575789.073 2571656.623 2552649.873 10618468.55
Cash payments during the quarter 2228191.694 2472757.51 2468790.358 2450543.879 10193729.8
Cash payments next quarter 334548 92841.32058 103031.5629 102866.2649 633287.1484
Total cash payments 2562739.694 2565598.83 2571821.921 2553410.143 10827016.95
Other cash payments
Direct labour 172749.8006 191710.3877 191402.8499 189988.5877 790319.2937
Manufacturing overhead 312597.5111 347076.901 346324.6234 348706.8358 1354705.871
Selling, admin, general expenses 25715.15 25715.15 25715.15 25715.15 102860.6
Total other cash payments 511062.4617 564502.4388 563442.6233 564410.5735 2247885.765
Total cash payments 3073802.156 3130101.269 3135264.544 3117820.717 13074902.72

Cash payments budget include all cash payments to pay for raw material purchases and other cash
payments which include direct labour, manufacturing overhead, selling admin general expenses. For raw
material purchases the company pays 96% in the current quarter and 4% in the next quarter. The
remaining of quarter 4 goes to next year and the 4% of previous year comes to quarter 1 of this year.
Schedule 9
Cash Budget
Cash Budget
Quarter
quarter 1 quarter 2 quarter 3 quarter 4 year
Cash Receipts 5623064.845 6926761.833 6987822.86 6996700.784 26554610.8
Cash payments 3073802.156 3130101.269 3135264.544 3117820.717 13074902.72
Cash 2549262.69 3796660.564 3852558.316 3878880.067 13479708.08
Add Beginning cash 22648
Cash 13502356.08

In cash budget we take cash receipts from cash receipts budget and cash disbursements from cash
payments budget. This gives us an estimate of cash available. Beginning cash is added which is just the
previous year ending cash balance which results in cash for the end of year.
Schedule 10
Cost of goods sold and cost of goods manufacture
In this budget we calculate cost of goods manufactured and cost of goods sold. For cost of goods
manufactured we take previous values of raw material inventory and purchases in it from our direct
material budget. Direct labour, manufacturing overhead and previous years’ work in progress is added
from which ending work in progress is subtracted.
For cost of goods sold we calculate absorption costs for direct material, direct labour and manufacturing
overhead. The calculations are show in the table below. This absorption cost is then used to calculate
finished goods beginning and finished goods ending inventory. This results in total cost of goods sold.

Cogs & Cogm

Raw material inventory (Beg) 423912.1
Add: Purchases of raw material 10618469
Raw material available for use 11042381
Less: raw material inventory (ending) 423912.1
Direct material used 10618469

Direct labour 790319.3

Manufacturing Overhead 1354706
Total Manufacturing cost 2145025
Add: work in progress inventory (beg) 244,483
Subtotal 2389508
Less: Work in process inventory (ending) 244,483

Cost of goods manufactured 2,145,025

Add: Finished good inventory (beg) 3214567
Cost of goods available for sale 5,359,592
Less: Finished goods inventory (ending) 3214567

Cost of Goods sold 2,145,025

 Absorption cost per unit
Types of manufacturing cost Amount
Direct Material 423912.09
Direct labour 31531
Manufacturing overhead 4044.210629
Total Absorption cost per unit 459487.3006

Schedule 11
Income statement
Income Statement
Sales revenue 13777308
Less: cost of goods sold 2,145,025
Gross profit 11,632,282
Other expense

Selling, Admin and General expenses 445179.72

Uncollectible Amounts 275546.15
total expenses 720725.87
net profit/loss 10,911,557

Income statement shows net profit. Sales revenue from sales budget from which cost of goods sold is
subtracted to give gross profit. Then selling, admin, general expenses and uncollectible accounts are
subtracted which gives us net profit for the year.
Schedule 12
Balance sheet
 Balance Sheet
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
Intangible assets 4,649
4,649
Long-term investments 949,710
Long-term loan 0
Long-term security deposits 9,378
Total Non-Current assets 963,737
CURRENT ASSETS
Stores, spare parts and loose tools 342,671
Stock-in-trade 3,882,962
Trade debts 706,857
Loans and advances 11,682
Trade deposits and short-term prepayments 39,937
Other receivables 39,937
Taxation – net 575,487
Cash and bank balances 13,502,356
Total Current Assets 19,101,889
TOTAL ASSETS 20,065,626
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
SHARE CAPITAL 425,069
Reserves 15,171,622
Total equity 15,596,691
NON-CURRENT LIABILITIES
Long-term financing 2,065,544
Deferred taxation 571,478
Government grant 6,005
Total Non-Current Liabilitites 2,643,027
CURRENT LIABILITIES
Trade and other payables 102,106
Accrued mark-up 88,392
Short-term borrowings 1,944,741
Current maturity of long-term financing 703,007
Current maturity of Government grant 11,535
Unclaimed dividend 10,287
Total Current Liabilities 2,860,068
Total Liabilities 5,503,095
TOTAL EQUITY AND LIABILITIES 21,099,786
Schedule 13
Cash Flows
Cash Flow
Cash receipts from the customers 26554610.8

Cash payments
To suppliers of raw material 10827016.95
For direct labour 790319.2937
For manufacturing overhead expenditures 1354705.871
For selling, general and administration expenses 102860.6
For interest
Total Cash payments 13074902.72
Net cash flow from operating activities 13479708.08

Cash Flows from investing activities 0

Net cash used by investing activities 0

Cash 13479708.08
add beginning cash 22648
cash 13502356.08

Cash flow statement shows ending cash in hand for the budgeted period. This includes similar
calculations to cash budget with ending cash in cash budget being equal to ending cash in cash flow
statement.
Bibliography
https://gfg.com.pk/cpl/
https://dps.psx.com.pk/company/CPPL
https://tradingeconomics.com/pakistan/inflation-cpi?embed/
forecast#:~:text=In%20the%20long%2Dterm%2C%20the,according
%20to%20our%20econometric%20models.
Fundamentals of marketing.docx
https://www.youtube.com/watch?v=xtreduCx0I4