MBM-203
TERM PAPER
ON
PREPARATION OF VARIOUS TYPESOF BUDGETS
IN
A MANUFACTURING ORGANISATION

SUBMITTED TO:SUBMITTED BY:
Dr. SUNITA MALHOTRA NEHA MISHRA
FACULTY OF SOCIAL SCIENCES PIYUSH GARG RANJAN YADAV SONAL AGARWAL

DAYALBAGH EDUCATIONAL INSTITUTE
(DEEMED UNIVERSITY)
DAYALBAGH, AGRA
MEANING OF CASH BUDGET:A forecast of estimated cash receipts and disbursements for a specified period of time.
CASH BUDGET FOR JANUARY

Beginning Cash Balance $28,000
Cash Collections on Sales (60 day lag) $47,000
Sold old machine in January 3,000
Investment Revenues 2,000 Total Cash Inflows 52,000

Disbursements for Manufacturing (30 day lag) 12,400
Marketing Expenses 10,000
General & Administrative Expenses 26,000
Capital Expenditures - 0 -
Repayments on Debt 750
Debt Interest Payments 450
Dividend Payments - 0 -
Taxes Paid - 0 - Total Cash Outflows 49,600 Net Cash Inflow (Outflow) 2,400 2,400
Ending Cash Balance 30,400
Minimum Desired Cash Balance 10,000
Cash Surplus or (Deficit) $20,400

MEANING OF SALES BUDGET:The sales budgets the most important functional budget. The forecasted quantities of sales and value of sales are presented in this budget.

TABLE 1 — SALES FORECAST
Product Volume Price Total Sales
Lace Shoes 16,000 $ 45.00 $ 720,000

MEANING OF PRODUCTION BUDGET:It is a plan of forecast of the output of the business divided into various products.

TABLE-2PRODUCTION BUDGET

Planned Sales (table 1) 16,000
Desired Ending Inventory 1,500
Total Units 17,500
Less Beginning Inventory (3,000)
Planned Production 14,500

TABLE 3 — MATERIALS BUDGET
Lace Shoes require .25 square yards of leather and leather is estimated to costs $ 5.00 per yard next year. Materials Required = 14,500 (Table 2) x .25 = 3,625 yards.
Materials Required for Production 3,625
Desired Ending Inventory 375
Total Materials 4,000
Less Beginning Inventory ( 500)
Total Materials Required 3,500
Unit Cost for Materials x $ 5.00
Total Materials Purchase $ 17,500
MEANING OF LABOR BUDGET: The labor budget will ensure that the plan will make the required number of employees of relevant grades and suitable skills available at the right time.
TABLE4 — LABOR BUDGET

Lace Shoes require .50 hours to produce one unit.
14,500 units x .50 = 7,250 hours.
The expected hourly labor rate next year is $ 12.00.

Estimated Production Hours 7,250
Hourly Labor Rate x 12.00
Total Labor Costs $ 87,000
MEA
TABLE 5 — OVERHEAD BUDGET (Based on Unique Drivers)
Estimated for each line item as follows:

Indirect Labor Costs * $ 12,000
Utilities 5,000
Depreciation 3,000
Maintenance 1,000
Insurance and Taxes 4,000
Total Overhead Costs $ 25,000

*Production Supervision and Inspection