Intro

In this presentation, I will introduce the role of accounting and prepare a budget for planning and
decision making using a spreadsheet with the information in the first part and the raw data
provided of each task’s needs in the second one.

Figure 1: The cash budget for VietStar Ltd from 1 June to 30 November

  June July August September October November

Cash at the begin of

the month 90,000 19,200 (9,420) (9,511) (9,192) (4,845)
Sale revenue 10,000 12,200 14,400 16,600 25,000 25,000
Cash sale 6,000 7,320 8,640 9,960 15,000 15,000
Credit sale     4,000 4,880 5,760 6,640
Total inflow 6,000 7,320 12,640 14,840 20,760 21,640
Cash available 96,000 26,520 3,220 5,329 11,568 16,795
Leasehold property 45,000          
Equipment 18,000         8,500
Motor vehicle 12,000          
Initial trading
inventories   25,000        
Inventory for risk   1,000 1,000 1,000 1,000 1,000
Wages and salaries 1,200 1,200 1,200 1,200 1,200 1,200
Other overhead 600 600 600 600 700 700
Commission   640 781 922 1,062 1,600
Gross profit (25% of
sale revenue) 2,500 3,050 3,600 4,150 6,250 6,250
Payment to supplier   7,500 9,150 10,800 12,450 18,750
Total outflow 76,800 35,940 12,731 14,522 16,412 31,750
Net cash movement (70,800) (28,620) (91) 318 4,348 (10,110)

Cash at the end of 19,200 (9,420) (9,511) (9,192) (4,845) (14,955)

 the month

The given data are 90,000 cash at bank, payments of 45,000 for leasehold property, 12,000 for a
vehicle and 25,000 worth for purchase of initial trading inventories. Sales revenue is 10,000  for
June, increased by 2,200 per month till September and 25,000 in October and November. Wages
and salaries cost 1,200 a month, other overheads cost 600 in the first 4 months and 700 in the last
2 months. Equipment purchase in June is 18,000 and then further equipment purchase in
November for 8,500. Cash sale count 60 percent of sale revenue, while credit sale count 40
percent of the previous 2 month as the conclusion of credit customer will pay two month after
agreement of the sale. There will be new payments in July including inventory in one month’s
credit, payment to the supplier because inventory purchase is also one month’s credit and
commission which is payable one month after the sale is agreed. The total outflow is total of
leasehold property, equipment, motor vehicle, initial inventories, initial purchase risk, wages and
salaries, overheads, commission and payment to supplier. The total inflow is the subtraction of
cash sale and credit sale. Then the net cash movement is the subtraction of total inflow from total
outflow. The net cash movement of September and October is positive while the rest of the
month is a negative.
Leasehold property: should include in fixed asset which can depreciate monthly

Equipment and vehicle should be listed on fixed asset

Trading inventories: should divided to pay monthly

Revenue : try to increase

Credit sale too high

Figure 2: Flexible budget for Greenfield company

  Budge Fixed Variable Flexibl Actual Actual Varianc
 cost
under
t cost cost e results e
flexible
cost
- Directand
Production labour cost is decrease in actual result, while the sale revenue and production is
sales ofactually
the unchanged, so there are issues in paying labour, they are paid lower than they
3,000     4,500 4,500  
should be. This mean they are paid less than they should be with the effort they put in.
Metacloud
(units)This is a sign of labor exploitation, can lead to bigger problems later on and violate  
ethics. (a)
Sales revenue 30,000     45,000 45,000 0  
Direct My team recommend
materials 6,900 check the  informationxabout wages and salaries
10,350 9,500 and bring
850 F
Direct adjustment
labour timely to know deeper
5,400   about thexproblems
8,100and solve7,300
it. 800 F
- Actual cost of direct
Maintenance 2,550 material is  lower than flexible
x budget. While
3,825 there are (675)
4,500 no A
information about
Depreciation needed actions
2,500 x of controlling  costs,
2,500there must be some mistake
2,500 0 in  
information
Rent and rates statistics
2,000 or the material
x bought  are cheaper
2,000 than expected.
2,300 In short,
(300)there is a A
data inconsistency.
Other costs 5,600     7,400 7,000 400 F
My team
Total costs (b) recommend
24,950 having an   inspection of  the34,175
quality and price of the material,
33,100 1,075 F
ensuring
Profit (a) – (b) that the right material  is used for production
5,050   10,825and that 11,900
there is no (1,075)
mistake in the A
From theprice. If there
budget, is budget
every no problem, reviewcost
in variable the are
information about
much lower purchasing
than materials
flexible budget, particularlly
the flexible is one and a half times higher than budget. This mean the company producing are
increased lead to the rise of variable cost. Reflecting the actual results, the direct materials, direct
labour and other cost are favourable, maintenance and rent and rates are adverse. So I draw to
some problems: