tiểu luận group assignment managerial accounting

Total cash disbursements for S&A expenses of the original budget & Scenerio 4...11LIST OF CHARTSFigure 1.. Total cash disbursements for S&A expenses of the original budget & Scenerio 4..

BO GIAO DUC VA DAO TAO TRƯỜNG ĐẠI HQC KINH TE - DAI HOC DA NANG

KHOA: KE TOAN

GROUP ASSIGNMENT MANAGERIAL ACCOUNTING

GROUP 11 - 47K06.1

Instructor: PhD Ha Phuoc Vu Class: 47K06.1

Student: Tran Thi Ngoc Tran

Phan Thi Quynh Trung Ngo Thi Van

Da Nang, 2023

Table of Contents

I Introduce: 4

II Analyse the change of the master budget in each sC€TI€FTO: 525 55G se 25 555556 8

1 Discounting prices by 20 percent, which in turn increases sales volume per month by 10

2 Increasing the marketing budget by 10 percent per month, which in turn generates an

additional 20 percent in sales revenue 9

3 Offering suppliers a one-month trade credit 11

4, Reducing rental/property related costs by 15 percent per miontfÌ s2 << s «<< << 12

LIST OF TABLES

Table 1 Cash budget - - 1 2.10201212011211 121 1115111511 1111 11111111111 111 11111 8111 ky 2 Table 2 Cash collection - 1 2012111211 1211 1211111111 1111111 1101110111111 111111 11H 1H kg 3 Table 3 Cash disbursements for merchandise purchases - 52222255532 3 Table 4 Cash disbursements for selling and administrative expeñses 5 Table 5 Cash budget In scerier1O Ì - 2 1 2212222112311 1131 1111113111111 1111111111111 k2 6 Table 6 Total cash collection of the original budget & Scenerio Ì - 6 Table 7 Cash budget in scenerio 2.0 cccccc ccc cccccectecetesseeteeesessesesesessssesssesssenssesees 7 Table § Cash Budget In scerer1O 3 - 2 1 22 0020112011101 1113111111111 1 1111111111112 9 Table 9 Ending cash balance of the ortiginal budget & Scenerio 3 9 Table 10 Cash Budget in scenerIo 4 - L2 0 111121111211 11211121111 111111811111 rg 10 Table 11 Total cash disbursements for S&A expenses of the original budget &

SCOMCTIO 4a 11

LIST OF CHARTS

Figure 1 Ending cash balance of the original budget & Scenario Ì - - 8 Figure 2 Total cash collection of the original budget & Scenerio 2.0.0.0 9 Figure 3 Ending cash balance of the oripinal budsøet & ScenarIo 2 - - 10 Figure 4 Ending cash balance of the original budget & Scenario 3 - - 11 Figure 5 Total cash disbursements for S&A expenses of the original budget &

SCOMCTIO 4a 12 Figure 6 Ending cash balance of the original budget and scenerio 4 13

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GROUP EVALUA¿

Members Tasks E

a (J Save to a Studylist

C

Tran Thi Ngoc Tran - Introduce about `" ¬

(Leader) company effectively allocating

- Analysis cash specific tasks to each team disbursements for | member

S&A expenses - Closely monitoring the and equipment progress of the team's purchase work, ensuring that the

- Scenario 3 & 4 team's project is on

schedule

- Successfully completing tasks

Phan Thi Quynh Trung | - Cash collections - A serious and 100%

analysis responsible attitude when

- Scenario 2 working on group

- Do Word projects

- Accomplishing assigned tasks correctly

- Adhering to the team's set deadlines Ngo Thi Van - Cash - A serious and 100%

disbursements responsible attitude when analysis working on group

- Financing analysis | projects

- Scenario 1 - Accomplishing assigned

tasks correctly

- Adhering to the team's set deadlines

1 Introduce:

- Company name: TCF Company

- Items: T-Shirts

- Slogan: Trendy-Confident-Fashion

- Trading company specializes in providing high quality and diverse t-shirts From simple round necks to unique prints, we constantly adapt our collections

to match the latest trends and satisfy our customers' needs

- TCF company, a start-up business, is in need of master budget for the coming year

- Preparing a cash budget helps the company predict and manage the amount of cash it will collect and spend in a certain period of time, through analyzing expected sources of revenue and expenses

II Cash Budget Analysis:

- After discussion and evaluation, our company has agreed to present the budget estimate for next year as follows:

Unit: £

Jan Feb Mar Apr May lun Jul Aug Sep Oct Nov Dec

Cash balance, beginning 18.000 48.442 41.462 67.555 92.390 114.998 142.120 168.549 196.348 223.883 248.035 276.152 Add cash collections 79.442 87.619 86.118 83.382 83.068 86.536 87.476 87.904 87.701 89.319 90.725 114.751 Total cash available 97.442 136.060 127.580 150.936 175.458 201.533 229.596 256.452 284.109 313.202 338.760 390.902

Less cash disbursements

Merchandise purchase 24.000 14.398 31.445 33.546 33.360 34.413 35.047 35.104 35.226 35.667 37.609 43.301

S&A 25.000 25.000 26.580 25.000 27.100 25000 25.000 25.000 25.000 29.500 25.000 25.000

Equipment purchase 3.700 2.000 1.000 Total cash disbursements 49.000 43.098 60.025 58.546 60.460 59.413 61.047 60.104 60.226 65.167 62.609 68.301

Excess (deficiency) of cash 48.442 92.962 67.355 92.390 114.998 142.120 168.549 196.348 223.883 248.035 276.152 322.601 Financing

Borrowing

Repayment (50.000)

Interest (1.500)

Ending cash balance 48.442 41.462 67.555 92.390 114.998 142.120 168.543 196.348 223.883 248.035 276.152 322.601

Table 1 Cash budget

- Cash Budget includes 4 main parts:

- Cash collections: are all cash inflows primarily from sales (except borrowing) expected during the budgeting period

- Cash expenditure part: is all planned cash payments for the budgeting period (purchase of goods, equipment )

- The amount of excess money (Cash collections is more than Cash disbursements) or shortage (Cash collections is less than Cash disbursements)

- Financing: is the borrowings, payables and interest expected to occur during the budgeting period (In this Cash Budget, it is assumed that all loans are borrowed on the first day of the loan period and that the loans will be repaid at the end of the quarter)

Our company assumes the following:

c Sales are 70% for cash and 30% on credit All payments on credit sales are collected in the month

following sale The accounts receivable at December 31 are a result of December credit sales

j During March the company purchases a TV for £2,000 cash

| During May, the company outsouces a company for the maintenance service for £2,100 cash

m During October, the company outsources a company for an advertisement project for £4,500 cash

n Manag it wants to maintain a mini cash balance of £18,000 The company has an agreement with a local bank that allows the company to borrow in increments of £1,000 at the beginning of each

month, 3% interest rate and pay interest quarterly

1 Cash collections analysis:

We assume the sales quantity and selling price are 9.5 per unit (raw data sheet)

We choose the method of collecting 70% in cash and 30% on credit We have Cash sales as 30% of revenue, and the remaining 70% is Credit sales This month's total cash collection will be equal to this month's cash collection plus last month's credit card collection At the beginning of the year, we had a customer receivable balance of £16.200, so Total cash collection in January will equal the opening customer receivable balance of £16.200 plus Cash sales

in January In the remaining months, there is no opening balance, so Total cash collection will be equal to this month's Cash sales plus last month's Credit sales

Unit: £

Table 2 Cash collection

2 Cash disbursements analysis:

a Cash disbursements for merchandise purchases:

Unit: £

Table 3 Cash disbursements for merchandise purchases

We estimate monthly cost of goods sold (COGS) to be 40% of the month's revenue, and ending inventory to be 20% of the following month's COGS Then, the total number of goods needed in the period will be equal to the sum

of Budgeted COGS and Desired ending inventory, the quantity needed to buy

in the period will be equal to the number of goods needed in the period minus the total inventory at the beginning of the period Particularly in January, Our company will need £43.054, with opening inventory of £48.800 this means our company does not need to buy more goods i.e Cash disbursement for purchase is 0

In fact, the ending inventory of January will increase by £5.740, making the real ending balance £12.662 and will be transferred to the beginning inventory

of the following month At the end of the year, the company buys more and more goods, causing the Cash disbursement for purchase to gradually increase

Unit: £

My company chooses to pay 50% of the purchase within the period and 50% the following month The opening balance of accounts payable is £24.000 In January, there was no request to purchase additional goods during the period,

so Total cash disbursements for purchases was only £24.000 February does not have a 50% payment of January, so February's Total cash disbursements for purchases will be 50% February purchases of £14.398 The following months were similar, in general Total cash disbursements for purchases increased because the amount of goods required to purchase increased Total

cash disbursements for purchases of December only pay 50% of December purchases, the remaining 50% will be paid the following year

Cash disbursements for selling and administrative expenses:

Next year the company expects cash disbursements for selling and administrative expenses as follows:

Unit: £

Table 4 Cash disbursements for selling and administrative expenses Monthly expenses are budgeted £35.000 per month including:

Rental cost: £8.000

Marketing expenses: £4.000

Salary: £12.000

Depreciation (non-cash expenses): £10.000

Other expense: £1.000

As we assume, in March and October the company outsources two advertisement projects costing £1.580 cash and £4.500 cash respectively This advertising is aimed at achieving marketing objectives, so we add the advertising costs to the marketing costs in March and October and get new marketing costs of £5.580 and £8.500 respectively

Let's say other costs and maintenance services for equipments are for selling and administrative, so we will include the maintenance services costs incurred

in May of £2.100 in other costs with the total other costs incurred born in May is £3.100

Therefore, Total cash disbursements for S&A expenses is equal to the total of the above expenses except depreciation (non-cash expenses)

Cash disbursements for equipment purchase:

To serve the company's operations, we plan to:

Purchases a new computer for £3.700 cash in February

Purchases a TV for £2.000 cash in March

Purchases an A/C for £1.000 cash in July

3 Financing Analysis:

- The company intends to maintain a minimum cash balance each month of

£18.000, the company has an agreement with a local bank that allows the company to borrow in increments of £1.000 at the beginning of each month, 3% interest rate and pay interest Quarterly According to estimates, in the past

12 months the company maintained a cash balance greater than £18.000, so the company will not borrow money for the next year As for the £50.000 loans last year, the company will pay both principal and interest the month it has enough money to pay In February, the company's money was above the minimum level and enough to repay the loan, assuming the loan of £50.000 was borrowed from the beginning of December last year, the interest rate is 3% for 3 months

- Soin February, the total financial costs the company had to pay were £50.000 loans principal and £1.500 interest It is forecast that the cash flow in the company is increasing

Ill Analyse the change of the master budget in each scenerio:

1 Discounting prices by 20 percent, which in turn increases sales volume per month by 10 percent

In this context, we have a new cash budget as follows:

Unit: £ Jan Feb Mar Apr May lun jul Aug Sep Oct Now Dec

Cash balance, beginning 18.000 40.853 31515 58 230 51.470 102 487 127 942 152.693 178 802 204.655 227 Œ2 253 508

Add cash collections 71853 82 430 83 362 80.713 BO 410 83 766 84 677 85.091 B4 353 86 46] 8782? 111078 Total cash available 89.853, 123.282 114 877 138 943 151 880 186 254 212619 237.784 253 755 291 117 314913 364.587

Less cosh disbursements

Merchandise purchase 24.000 11.566 28.058 32.473 32.293 33.312 33.926 33.981 34.099 34.525, 36.405 42036 S&A, 25.000 25.000 26.580 25.000 27.100 25.000 25.000 25.000 25.000 29.500 25.000 25.000 Equipment purchase 3.700 2.000 1.000

Total cosh disbursements 49.000 40.266 56.648 57.473 59.393 58.312 59926 58.961 59.099 64.025 61405 §7036

5 fi if 40.953 83.016 58.230 81470 102.487 127.542 152.693 178.802 204.656 227.092 253.508 297551

Financing

Borrowing

Repayment (50.000)

interest (2.500)

40.853 31.516 58.230 81470 102 487 127.942 152 693 178.802 204.656 227.092 253 SOB 297.551

Table 5 Cash budget in scenerio | Assuming we find a supplier with a cheaper price, we reduce the price by 20% and increase the sales volume by 10% Monthly sales decreased compared to the beginning, so total cash collection decreased

Unit: £

Ag [sep Jot Nowe

87.476) 87.904) 87.751) 89313 90.725 114751

§4677 5.091) £4,953 85.451 87.822 111078

Lm [re [Mer [aor [wav lun

Total cash collection of the original budget| 73.442] §7 613 86.118) 83.382] 83 058

Total cash collection of scenerio 1 [11853 8332| 8073| 80410

Table 6 Total cash collection of the original budget & Scenerio | From my view point, revenue decreases so COGS also decreases and the total value of goods purchased during the period will also decrease Therefore, Cash

disbursement for purchase will decrease The number of products sold increased but the revenue and Cash disbursement for purchase decreased due to the decrease in product price Besides, the amount of purchases paid later is also reduced The company is buying goods at a lower price than the original price

Schedule of expected cash disbursements for S&A expenses is not affected, recording reduced prices and increased sales volume

Although it increased revenue and reduced selling prices, it did not have a strong impact on the company's minimum monthly cash flow Every month the company has cash greater than £18.000 and no loans appear Ending cash balance decreases compared to the beginning because the cash source from revenue decreases Reducing selling prices reduces the company's cash source even though revenue increases

== Ending cash balance of the original budget == Ending cash balance of scenerio 1

400.000

300.000

200.000

100.000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Figure 1.Ending cash balance of the original budget & Scenario 1

2 Increasing the marketing budget by 10 percent per month, which in turn

generates an additional 20 percent in sales revenue

Assuming we increase our marketing budget by 10% each month, we get the following new cash budget: