Create a Master Budget for a Fictional Company

Instructions: Based on the provided data, you are required to create a master budget for a fictional company. This assignment will test your understanding of the concepts covered in the “Creating and Managing Budgets” chapter.

Data:

Use the following data to create your master budget:

Sales Forecast:

 Month 1: £50,000

 Month 2: £60,000

 Month 3: £70,000

Cost of Goods Sold:

 Direct Materials: £10,000 per month

 Direct Labour: £8,000 per month

 Variable Overhead: £5,000 per month

Operating Expenses:

 Selling Expenses: £4,000 per month

 Administrative Expenses: £3,000 per month

Other Information:

 Cash balance at the beginning of the month: £20,000

 Desired ending cash balance: £15,000

 Minimum cash balance required: £10,000

 Accounts receivable collection period: 30 days

 Accounts payable payment period: 45 days

Assignment:

Based on the provided data, complete the following tasks:

1. Create a sales budget for each month.
2. Create a production budget for each month, assuming a 50% target ending inventory level.
3. Create a direct materials budget for each month, assuming a 20% desired ending inventory level.
4. Create a direct labour budget for each month.
5. Create a variable overhead budget for each month.
6. Create a selling expenses budget for each month.
7. Create an administrative expenses budget for each month.
8. Create a cash budget for each month.

Note: Show all calculations and provide explanations for your budgeting decisions.

Submission Guidelines:

Submit your completed assignment in a Word document or PDF file format. Include all calculations and explanations. Make sure your name and student ID are clearly stated on the document.

Good luck!