Palabala prepares monthly cash budgets. Relevamt data from assumed operating budges for the first two months of the 2022 are as follows: Sales Direct Materials Purchases Direct Labour Manufacturing Overhead Depreciation January February $100,000 $150,000 $50,000 $60,000 $20,000 $30,000 $10,000 $15,000 $5,000 $3,500 All sales are 50% cash 50% in the month following sale. All Expenses are paid in the month of sale Sales for December was $80,000 Direct Materials purchases for December was $40,000 Cash balance on 1st January 2022 was $20,000. Required: Prepare the cash budget for the two (2) months January to February 2022.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![7 Palabala prepares monthly cash budgets. Relevamt data from assumed operating budges
8 for the first two months of the 2022 are as follows:
9
Sales
1 Direct Materials Purchases
2 Direct Labour
3 Manufacturing Overhead
4 Depreciation
5
January February
$100,000 $150,000
$50,000
$60,000
$20,000
$30,000
$10,000
$15,000
$5,000 $3,500
6 All sales are 50% cash 50% in the month following sale.
3
8 All Expenses are paid in the month of sale
9
Sales for December was $80,000
1
2 Direct Materials purchases for December was $40,000
3
4 Cash balance on 1st January 2022 was $20,000.
5 Required:
6 Prepare the cash budget for the two (2) months January to February 2022.
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