Question

In: Accounting

1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has...

1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

  1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.    
  2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
  3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
  4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
  5. Alpha Ltd will pay overhead costs of £2,000 each month.
  6. The opening cash balance at 1 January 2021 will be £1,000.
  7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.
  8. Fixed costs of production are £100 per month, payable in the month.

1. Prepare a cash flow budget for the period 1 January 2021 to 30 June 2021 and indicate the closing balance as at 30 June 2021.

Solutions

Expert Solution

Answer:

We prepare below the revenue budget and then cash flow budget as required as below:

Insurance payment is made on 1st Dec 2020. Hence there will not be any cash outflow in the period Jan to Jun 2021 for Insurance payment.

Closing cash balance as at 30 June 2021 = £15,100

The above excel with 'show formula' is given below:


Related Solutions

. Alpha Ltd has appointed you as a manager in the budgeting department. The company has...
. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.       For the first three months of the...
Exercise 1 The production department of Alpha Ltd. normally operates at a capacity of 5 000...
Exercise 1 The production department of Alpha Ltd. normally operates at a capacity of 5 000 direct labor hours (DLH) per production period. In the coming production period (April-May) orders equivalent to only 3 000 DLH have been received. Even though direct labor is hired/paid on an hourly basis, Alpha Ltd. wants to deploy the available 2 000 DLH and considers two alternatives: First alternative: advancing the production of an anticipated future order that consumes             2 000 DLH (delivery date...
You are appointed as a transport manager for the oil and gas company in United Arab...
You are appointed as a transport manager for the oil and gas company in United Arab Emirates. Your company has witnessed many hazmat incidents in different transportation operations over the last two years. Your key role as the new transport manager is to minimize the number of incidents. Discuss the ten measures or strategies that you will take to ensure the safe transport of these hazardous materials and minimize the number of incidents. word limit 450-500
1 You are appointed as a Contract Manager for an Employer who will be inviting competitive...
1 You are appointed as a Contract Manager for an Employer who will be inviting competitive tenders for a new project. You have been asked to assist the Tender Team in terms of Contract Structure and documentation. You have been requested to prepare PRELIMINARY ENQUIRY FOR INVITATION TO TENDER as this is applicable where the JCT Standard Form of Building Contract, Intermediate Form of Building Contract or Agreement for Minor Building Works is to be used. You are required to...
Assume that you have been appointed as Marketing Manager for a company in your region. In...
Assume that you have been appointed as Marketing Manager for a company in your region. In the past, many of their new products were unsuccessful. The senior management team now wants to focus on proper idea generation for their new products and also wants to select profitable market segments correctly. i) How would you select profitable market segment(s) for this company? Justify your answer. ii) Discuss your strategies on how to generate proper ideas for this company’s new products.
You have been appointed as the Human Resource Manager of Milynn Deeds Insurance Company. For you...
You have been appointed as the Human Resource Manager of Milynn Deeds Insurance Company. For you to properly define the duties, responsibilities and accountabilities of a job, it is crucial to conduct a job analysis. Discuss the uses of job analysis information.
You have recently been appointed sales manager of an insurance company. Sales are declining and you...
You have recently been appointed sales manager of an insurance company. Sales are declining and you believe that a major factor causing this decline is a lack of motivation among your sales force. At present, they are paid a straight salary, the size of which depends on length of service. Outline your thoughts regarding how you would approach this situation. How do you motivate sales force using motivation theories in this COVID-19 pandemic process? What specific factors or activities do...
You are the newly appointed financial manager of Sami Partners company UAE. When you reviewed the...
You are the newly appointed financial manager of Sami Partners company UAE. When you reviewed the working of finance department, you found that the department doesn’t have proper internal control system to monitor the payment of Petty cash in the company. You realised that the current system may leads to leakage of cash , you are planning to establish an internal control system to address the issue. Available information for you: • Senior manager sanctions some amount cash to the...
You are working in the finance department of Innotech Ltd (INT). The Company has spent $3.4...
You are working in the finance department of Innotech Ltd (INT). The Company has spent $3.4 million in research and development over the past 12 months developing battery technology which will be incorporated into the Australian luxury car market. INT now need to choose between the following three options for bringing the product to market. These options are: Option 1: Manufacturing the product “in-house” and selling directly to the market Option 2: Licensing another company to manufacture and sell the...
Question 1 Suppose that you have been appointed the project manager for a project to develop...
Question 1 Suppose that you have been appointed the project manager for a project to develop an online booking system for a multi-doctor medical practice that will replace an existing desktop system. The key functionality that is required is as follows: • Patient registration • Patient login • Book first available appointment with any doctor • Book an appointment at a time of the patient’s choosing with a doctor of their choice. What development methodologies should you consider? How would...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT