finacial planning and budgeting

JARAMOGI OGINGA ODINGA UNIVERSITY OF SCIENCE AND TECHNOLOGY

WORK BASED ASSIGNMENT

ABA 319: FINANCIAL PLANNING, BUDGETING AND CONTROL

September - December 2015

Muthama JM

QUESTION

i) The following information was extracted from books of Tashzira ltd for the March 2014

to February 2015

a) The projected cash at hand as at 1st July 2014 was sh 1,200 b) Total sales forecasts for the period were as follows;

Month

2014/2015

March April May June July Aug Sept Oct Nov Dec Jan

2015

Feb

2015

Sales: Sh20/unit

260 200 320 290 400 300 350 400 390 400 260 250

Cash was received and recorded for sales after 3 months following the sale

c) Production in units was as follows;

Month March April May June July Aug Sept Oct Nov Dec Jan Feb

Production

(Units)

240 270 300 320 350 370 380 340 310 260 250 -

d) Raw materials cost was sh 5/unit and of this, 80% was paid in the month of production and

20% the next month after production

e) Direct labour cost was sh 8/unit which was payable in the month of production

f) Variable cost expenses were sh 2/unit and of this, 50% was paid in the month of production

and 50% in the following month after production

g) Fixed expenses were sh 400 per month payable each month of production

h) Machinery costing sh 2000 was to be paid for in the month of October

i) The company was to receive a legacy of sh 2,500 in December 2014

j) Total drawings amounted to sh 300 per month

It was the company’s policy to hold a minimum cash balance of sh 1000 throughout the budgeting

period

Required:

Prepare a cash budget for X ltd showing the balances at the end of each month for its 6 months

ended at 31st December 2014

ii) “In financial planning, it’s important that System designers and planers apply responsibility

accounting to identify what part of the organization has responsibility for each action’’

Use relevant arguments in support of this statement

NB: This work based assignment is due on the 29th of November 2015, please comply.