This paper circulates around the core theme of Lance Limited manufactures a special component (WKQ 14) that is used in the making of calculators. As a step towards reducing uncertainty over the finance needs of the new business, the finance manager has asked you to prepare a cash budget for Lance Ltd together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Lance Limited manufactures a special component (WKQ 14) that is used in
the making of calculators. As a step towards reducing uncertainty over
the finance needs of the new business, the finance manager has asked you
to prepare a cash budget for Lance Ltd for the eight (8) months period
from 1 March 2014 till 31 October 2014.You have collected some raw data
from the concerned department heads and tabulated them as follows:a) The
following projected sales figures are given:Sales
ForecastMonthEstimated Sales
UnitsMarch260,000April250,000May270,000June280,000July300,000August290,000September310,000October270,000November280,000The
estimated selling price per special component is $5.00.The collections
for the above sales forecast are as follows:i. Collection from customers
within the month of sale = 10% ( deemed to be cash sales)ii. Collection
from customers following the month of sale = 50%iii. Collection from
customers following the second month of sales = 30%iv. 10% of the sales
are estimated to become irrecoverable.b) Direct materials are acquired
one month prior to production and are paid the following month of
purchase. One special component (WKQ 14) uses 2 units of direct
materials. The company keeps stock of the direct materials, equal to 25%
of the next month’s requirements.Balance of direct materials as at end
of February 2014 amounts to 130,000 units of direct material at $0.30
per unit. There is no expected change in the direct material costs.c)
The Direct Labour cost is paid in the month when such costs are
incurred.The number of hours estimated are as
follows:MarchAprilMayJuneJulyAugustSeptemberOctober130,000135,000140,000148,000152,000154,000150,000148,000The
company pays $2.50 per direct labour hour.d) Operating Expenses are
estimated to be $332,000 per month and this is paid at the end of the
month in which it is incurred. Included in the operating expenses are
depreciation charges worth $16,000 per month.e) Income tax payments of
$60,000 are due both in June and September 2014.f) Lance Ltd’s Cash on
Hand at the end of February 2014 was $350,000Credit for this assignment
will be given on the workings, formulas and calculations used to arrive
at the financial values.Required:Prepare the following budgets:1) Sales
[4 marks]2) Direct Materials Purchase Budget [8 marks]3) Direct Labour
Budget [4 marks]4) A monthly cash budget for the 8-month period of March
to 31 October 2014. [22 marks]Format and presentation [2 marks]Total 40
Marks