BBA 4002 P.docx - TABLE OF CONTENT NO 1.0 2.0 3.0 4.0 5.0...

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Page 2 of 23 TABLE OF CONTENT NO. TOPIC PAGE 1.0 Content 2 2.0 Introduction 3 3.0 Task 1 4-7 4.0 Task 2 8-11 5.0 Task 3 12-18 6.0 Coursework 19-24 7.0 Conclusion 25 8.0 Reference 26 2.0 Introduction “Budgeting in a Company is like navigation in a ship. On the ship, the crew keeps a log of the happenings on and the position of the ship from hour to hour. The captain learns valuable lessons by studying the factors that caused misadventures in the past. But, to pilot his ship safely, he requires his navigation officer to plan the course ahead and to constantly check the position of the ship against the plan. If the ship is off-course, the navigation officer must report it immediately, so that the captain can take prompt corrective action. In addition, the
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navigation officer should be in a position to foresee possible obstacles and deviations and to minimize losses by taking early corrective action in case the ship is off-course.” Just as a ship that needs to be navigated properly to reach its destination safely, a Company needs a well-planned budget to help achieve its goals. The ship’s log is like the previous budgets of the Company. Just as the Captain refers to the log to learn valuable lessons and avoid repeating mistakes, managers also use previous budgets to help set benchmark in light of current business conditions. Planning the ship’s course in advance helps the Captain to expect and identify deviations from course and carry out salvage operations as early as possible. In the same way, preparing a budget helps the Company to meaningfully identify variances during the year. 3.0 Task 1 1.1 What do you understand by master budget? A master budget is an expensive business strategy that documents expected future sales, productions levels, purchases, future expenses incurred, capital investments, and even loads to be acquired and repaid. In other words, the master budget includes all other financial budgets as wells as a budgeted income statement and balance sheet. The master budget is basically management’s strategic plan for the future of the company. Every aspect of the company operations is charted and documented for
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Page 4 of 23 future predictions . Each department in a company has its own set of goals. The sales department attempts to maximize the number of units sold. The purchasing department’s primary objective is to ensure that it buys goods and services of the desired quality at the lowest possible price. The production department’s focus is to increase output by making the best possible use of the machinery and equipment at its disposal. 1.2 Pushpack and Co., a glass manufacturing company requires you to calculate and present the budget for the next year from the following information: Toughened glass $ 2,00,000 Bent toughened glass $ 3,00,000 Direct material cost 60% of sales Direct wages 10 workers @ $ 100 per month Factory overheads Indirect labour: Work manager $ 300 per month Foreman $ 200 per month
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Page 5 of 23 Stores and spares 2% on sales Depreciation on machinery $ 6,000 Light and power $ 2,000 Repairs and maintenance $ 4,000
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  • Fall '19
  • James

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