Cash Budget Analysis for Excel Berhad

How can we calculate the cash budget for August and September for Excel Berhad?

What are the key factors that need to be considered in order to determine the cash balance for these months?

Cash Budget Analysis:

To calculate the cash budget for August and September for Excel Berhad, we need to consider all the cash inflows and outflows during these months based on the given information.

Cash Budget for August:

Cash inflows:

- August sales revenue (200,000 units at RM5 per unit) = RM1,000,000

- Cash receipts from debtors (70% of July sales + 28% of August sales) = 70% of RM900,000 + 28% of RM1,000,000 = RM630,000 + RM280,000 = RM910,000

Total cash inflows: RM1,000,000 + RM910,000 = RM1,910,000

Cash outflows:

- Direct labor cost (200,000 units at RM1 per unit) = RM200,000

- Variable overhead (200,000 units at RM0.50 per unit) = RM100,000

- Fixed overhead (including depreciation) = RM,000

Net cash flow for August: RM1,910,000 - RM500,000 = RM1,410,000

Cash Budget for September:

Cash inflows:

- September sales revenue (240,000 units at RM5 per unit) = RM1,200,000

- Cash receipts from debtors (70% of August sales + 28% of September sales) = 70% of RM1,000,000 + 28% of RM1,200,000 = RM700,000 + RM336,000 = RM1,036,000

Total cash inflows: RM1,200,000 + RM1,036,000 = RM2,236,000

Cash outflows:

- Direct labor cost (240,000 units at RM1 per unit) = RM240,000

- Variable overhead (240,000 units at RM0.50 per unit) = RM120,000

Based on the above calculations, the cash budget analysis for Excel Berhad shows that the net cash flow for August is RM1,410,000 and for September is RM2,116,000. This analysis allows the company to anticipate and plan for any cash shortages or surpluses during these months.