Program : BBA

Module Code & Name : BBA 2008 Management Accounting and Finance 2
Title : Assignment Question

ASSIGNMENT (30 marks)

Task 1 [11]
What is a cash budget? How it is useful in managerial decision making?

Task 2 [9]
A shop floor supervisor of a small factory presented the following cost for Job No. 303, to
determine the selling price.
Per Unit
$
Material 70
Direct wages 18 hours @ $ 2.50 45
(Depts. A 8 hours; Depts. B 6 hours; Depts. C 4 hours)
Chargeable expenses 5
120
Add: 33.33% for expenses cost 40
160

Analysis of the Profit/Loss Account

(for the year 2012)
Material used 150,000Sales less returns 250,000
Direct wages
Depts. A 10,000
Depts. B 12,000
Depts. C 8,000 30,000
Special stores items 4,000
Overhead:
Depts. A 5,000
Depts. B 9,000
Depts. C 2,000 16,000
Works cost 200,000
Gross profits c/d 50,000
250,000 250,000

Selling expenses 20,000 Gross profits b/d 50,000

Net profit 30,000
50,000 50,000

It is also noted that average hourly rates for the three Departments A, B and C are similar.
You are required to:
(a) Draw up a job cost sheet.
(b) Calculate the entire revised cost using 2005 actual figures as basis. [3]
(c) Add 20% to total cost to determine selling price. [3]
[3]
Format and layout of presentation, referencing style. [1]
TASK 1
1)Explain what is cash budget?
- A cash budget is an estimation of a person's or a company's cash inputs
and outputs over a specific period of time.
- Cash budgets are mostly used to estimate whether or not a company has a
sufficient amount of cash to fulfill regular operations. You can also use it to
determine whether too much of a company’s cash is being spent in unpro-
ductive ways.
- By creating a cash budget - wherein a company develops a summary of
the anticipated revenues, operating expenditures, sale and purchase of
assets, and admission or settlement of debt – one can determine when more
cash resources are needed, and when there will be an excess of cash.
- https://debitoor.com/dictionary/cash-budget
- http://www.investopedia.com/terms/c/cashbudget.asp

2) How it is useful in managerial decision making?

- The management accounting view of business may be divided into two
broad categories: (1) basic features and (2) basic assumptions.
- The Process, making assumptions, evaluating result and adjusting expectation
- http://mykeepit.blogspot.my/2013/02/what-is-cash-budget-how-it-is-
useful-in.html
- http://www.gistarea.com/cash-budget-cash-budgeting-decision-
making-tool/
- http://www.ehow.com/info_7750370_important-create-cash-
budget.html