p35 Selling Overhead Budget 80,000 90,000 1,00,000 Sales (A) Fixed overhead: Advertisement Salaries of the sales dept. Expenses of the sales dept. Salesmen remuneration Total (A) (B) Variable overhead: Commission Carriage outwards Agents Commission 1.000 1,000 750 3,000 5.750 1,000 1,000 750 3,000 5,750 1.000 1,000 750 3,000 5.750 (72,000 x 1%) = 720(80,000 x 1%) = 800 4.000 4.500 (8,000 x 7.5%) = 600 (10,000 x 7.5%) = 750 5,320 6,050 11,070 11,800 (89,500 x 1%) = 895 5.000 (10,500 x 7.5%) = 788 6,683 12,433 Total (B) Grand Total (A+B) Illustration 5 ABC Ltd. a newly started company wishes to prepare Cash Budget from January. Prepare a cash budget for the first six months from the following estimated revenue and expenses. Overheads Month Materials Total Sales Wages (3) () R) Production Selling & Distribution R) () January 20,000 20,000 4,000 3,200 800 February 22,000 14,000 4,400 3,300 900 March 28.000 14,000 4,600 3,400 900 April 36.000 22,000 4,600 3,500 1,000 May 30,000 20,000 4,000 3,200 900 June 40,000 25,000 5,000 3,600 1.200 Cash balance on 1st January was 10,000. A new machinery is to be installed at 20,000 on credit, to be repaid by two equal instalments in March and April, sales commission @5% on total sales is to be paid within a month following actual sales. 210,000 being the amount of 2nd call may be received in March. Share premium amounting to 32,000 is also obtained with the 2nd call. Period of credit allowed by suppliers - 2months: period of credit allowed to customers - Imonth, delay in payment of overheads 1 month. delay in payment of wages y month. Assume cash sales to be 50% of total sales