[rayhwlam]

@johnmoffat said:
The brought forward balance is not relevant for calculating the excess cash available each month.

If the question required you to calculate the cash balance at the end of each month, then you would need to take into account the opening balance.

Thanks John. If the question heading just said “Prepare Cash Budgets for the month” then I think the brought forward will have to be included?? otherwise just as you said.

[rayhwlam]

@johnmoffat said:
The purchases budget is budgeting the cost of the purchases in each month.
Given that the cost of the goods is only 60% of the selling price, the cost of what is bought is only 60% of the sales revenue.

(Have you watched my free lectures on budgeting?)

I have watched your free lectures. 🙂

There are other questions of the above: Question 2) Prepare a Schedule of Expected Cash Collections for November and December and Question 3) Prepare Cash Budgets for November and December.

In question 2, I calculated the total cash collection in Nov is $363,500 and in Dec is $301,200

And in question 3, the answer book is

_________________________________________________November…December

Cash receipts…………………………………………………………………$363,500…….$301,200

Cash disbursements:
Disbursements for merchandise……………………………………….$196,000……$183,600

Other monthly expenses………………………………………………….$21,200……..$21,200

Total cash disbursements………………………………………………..$217,200…….$204,800

Excess (deficiency) of cash available over disbursements…..$146,300……..$96,400

My problem: Do I need to add the cash item of the SOFP of October $22,000 to November as the beginning cash balance. The answer book hasnt included the cash $22,000 in the answer and i dont know the reason. If need to add the beginning cash balance then the ending cash balance for November should be $146,300 + $22,000?

Thanks John!

[rayhwlam]

I understand that if there is any sales, then the net book value will fall but I don’t understand why the net book value of $20,000 is the sales figure as well. Thanks!

[rayhwlam]

For (b)

is it

Production overhead absorption rate for Machining department:
71,327/27,200 = $2.62/machine hour
Production overhead absorption rate for Assembly department:
50,756/18,000= $2.82/direct labour hour

Thanks you John.

[rayhwlam]

Answer:

Annual cost per vehicle
Fixed charges?????????????????????$5,400
Drivers’ wages?????????????????????$10,260
Running cost 18,000 x 33 cents?????????????$5,940
Total Cost??????????????????????($21,600)

??????????????????????Ton/km’s
Income
100 outward journeys = 9,000km’s x 10tons???90,000
Return journeys = 400 tons x 90 km’s ??????36,000
Total 126,000 x 24 cents????????????????$30,240

Annual profit per vehicle ????????????????8,640

[Author]

Posts