Case Study: Master Budgeting with Supporting Schedule

|2.1 Explain the purpose of agreeing the format in which a budget will be presented |Question 1 Page 2 |

Budgeting is perhaps the most essential process involved in the United States government. While this process seems to exist only in the background, it is, in reality, what allows all other processes of government to function as they do. In order to satisfy the most necessities of modern society, changes must be made to each of the three major categories of the budget: the big five, the middle five, and the little guys.

The total expenditure for May is at £18,900 and this is because of the cost for the delivery van. Irregular expenditure is bad for the company because you don’t know when it going to happen or how much going to cost. It had effect the business badly because it had a monthly cash flow. However, Steve has made a dramatic improvement between this month and all the others as the total expenditure totals up to £10,900 for June it was better than may total expenditure £18,200 the reason why there is a decrease is the delivery van was an irregular outflow.

The standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows:

to generate cash flows from its operations, a company may not be able to survive in the future: cash

Understanding the flow of cash within an organization is critical to knowing the health of an organization. Without this understanding, a business may run into a situation where even though they are profitable, they may not have enough cash on hand to meet their obligations. This paper will look at the case study Eat at My Restaurant – Cash Flow (Gibson, 2013) and will analyze the difference between net cash provided by operating activities and net income and determine which a better indicator of long-term profitability is. It will then provide an analysis of the cash flow

Although the income statement and balance sheet provide measures of a company’s success in terms of performance and financial position, cash flow is also vital to a company’s long-term success. Disclosing the sources and uses of cash helps creditors, investors, and other statement users evaluate a company’s liquidity, solvency, and financial flexibility. Financial flexibility is the ability of a company to react and adapt to financial adversities and opportunities. McDonald’s cash flow is

Imposition of the price ceiling of $0.50 will lead to a quantity demanded of 8,000. The company will be at its break even since it will make zero profit. The price is equivalent to the average total cost (Lehdonvirta, & Castronova,

On the other hand, the company has been growing constantly. In deed, according to the net income estimation for 2007 (see Table 7) the company increases its profits $25 thousand dollars more than the previous year. This is an evidence of how the company is been management and of its willing to grow year after year. Nevertheless, the first quarter of 2007 the working capital only has increased by $7 thousand dollars, which is the difference between the current assets and current liabilities but the importance of this is that according to the rotation on receivables and payable accounts, shown in Table 5 and 10, leads us to the conclusion that the company will have to pay its suppliers

This accounting policy will improve the preliminary financial statements drastically. Net income will be substantially higher; rather than expensing everything right away, we are matching the expenses with revenues. This better represents the earnings of the company. Additionally, the balance sheet will be show a higher amount of assets due to the capitalization of expenses. This will increase asset-to-debt ratios and improve the attractiveness of the company to investors.

Even though the company has been turning in profits, the ineffective collection practice, not availing trade discounts on time and ineffective inventory management has led the company in need of larger financing needs.

With respect to the company's balance sheet, the company is in a decent financial position despite the losses. In terms of liquidity, the company has remained liquid

Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below.

The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.

And the company is suffering from liquidity challenges because it is not in a position to finance its day-to-day activities, so its bank account stands over drawn. This situation has impacted negatively on the company's ability to repay its earlier loans and customers are upset because of delayed delivery.