Accounting for Business Decisions Making

Master Budget

Master budget comprises a set of budgets at various functional level, like, production, marketing, selling & administration, manufacturing & many others and accumulates or aggregate these all to forecast the future performance (Horngren and et.al., 2013). As per the scenario, Nusajaya Sdn. Bhd is planning to prepare budgets for the quarter ending on September 30 to anticipate or target their future year’s performance, hence, various budgets are prepared here as under:

Sales Budget

This budget is used to predict the quantity of sales & total turnover that will be generated from the delivery of goods & services by Nusajaya Sdn. Bhd (DRURY, 2013).

Table 1Sales budget

Production budget

The main aim of making production budget is to determine the number of units that Nusajaya Sdn. Bhd’s production department will be require to manufacture to satisfy their market demand (Bebbington, Unerman and O'Dwyer, 2014).

Table 2Production budget

Material purchase budget

In manufacturing concern, companies require buying material for the production of good & services, therefore, they prepare material purchase budget to determine the quantity of goods & its total funding requirement for the material purchase (McGraw, Freeman and et.al., 2014).

Table 3Material purchase budget

Cash inflow from consumers

Here, Nusajaya Sdn. Bhd’s sales policy indicates that 50% of the sales will be receive in the same month, whereas 30% in the next month & 20% in the next second following month. Therefore, the expected cash that Nusajaya will obtain from the sales of its offerings is computed here as under:

Table 4Cash inflow from consumers

Expected cash payment to suppliers

Nusajaya Sdn. Bhd. decided to pay 50% in the same month in which material has been purchased and remaining 50% will be paid in the next month.

Table 5Cash payment to suppliers

Direct labor budget

Nusajaya will be require to recruit labor for transforming their raw material into finished goods, therefore, they will be require to pay wages to them, it can be computed through preparing direct labor budget (Fatoki, 2014), illustrated here as under:

Table 6Direct labor budget

Manufacturing overhead budget

This budget gives information only about those variable and fixed overheads that are directly related to the production function, prepared below:

Table 7manufacturing overhead budget

Selling and administrativeoverhead budget

This budget is used to prepare the total amount that Nusajaya will spend on their selling & administration expenditures like advertisement, sales promotion & many others, prepared here as under:

Table 8Selling and administrative overhead budget

Ending finished stock inventory budget

Table 9Ending finished stock inventory budget

Cash budget

It is the most important budget which accumulates the forecasted cash incoming or expenditures for the future period and targeted at determining the net cash either surplus or deficit (Hamza, Mutala and Antwi, 2015), prepared below:

Table 10Cash budget

Budgeted income statement

Table 11Budgeted income statement

Budgeted statement of financial position

Table 12Budgeted statement of financial position

Conclusion

Report concluded that as per the budgeted plan, Nusajaya Sdn. Bhd.will have a quarterly return of 414,435 at the end of September. However, in the August, it will have cash deficit worth 11,200 therefore, it will have to take a loan of 61,200 top maintain a minimum cash balance of 50000 that will be repaid in next month at an annual interest of 15% p.a. to 765. Therefore, company can be suggested to control it spending and maximize their cash revenues through modifying the credit policy so as to get prompt and quick receipts from the debtors to maintain enough cash.

Reference

Books and Journals

• Bebbington, J., Unerman, J. and O'Dwyer, B., 2014. Sustainability accounting and accountability. Routledge.
• DRURY, C.M., 2013. Management and cost accounting. Springer.
• Fatoki, O., 2014. Working capital management practices of immigrant entrepreneurs in South Africa. Mediterranean Journal of Social Sciences. 5(10). p.52.
• Hamza, K., Mutala, Z. and Antwi, S.K., 2015. Cash Management Practices And Financial Performance Of Small And Medium Enterprises (SMEs) In The Northern Region Of Ghana.International Journal of Economics, Commerce and Management.
• Horngren, C.T.,and et.al.,2013.Introduction to management accounting. Pearson Higher Ed.
• Krachler, N. and Greer, I., 2015. When does marketisation lead to privatisation? Profit-making in English health services after the 2012 Health and Social Care Act.Social Science & Medicine. 124. pp.215-223.
• McGraw Hill.Freeman, R.J.,and et.al., 2014. Governmental and nonprofit accounting: Theory and practice.JPAEJOURNAL OF PUBLIC AFFAIRS EDUCATION VOLUME 20 NUMBER. 3(2). p.441.

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