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Question;Toggel Limited is in the business of sale and distribution of computer software. The;company collates the following data to prepare its cash budget for the 6 months ended;30 September 2014.;? Sales for the 6 months are expected to rise by 3% month-on-month. The sales;expected for 30 September 2014 is $2 million.;? The bank balance on 1 April 2014 is expected to be $50,000.;? Out of the 80% of sales that are on credit, 3% of debtors is expected not to pay;up while 80% will pay up one month after sale and the remaining will pay two;months after sale (assume nil sales before 1 April 2014).;? Research and developments costs are estimated at $550,000 per month while;depreciation expense on its equipment is expected to be $250,000 per month.;? Staff costs is divided into permanent and temporary staff. The permanent staff;wages averages $280,000 per month while temporary staffs are employed only;from April to June 2014 to cope with the seasonal increases in sales. Temporary;staff are paid 2% of sales each month.;? The company expects to replace its computers in the month of August 2014 and;this is expected to cost $1,000,000.;? Rental of its business premise is prepaid in January each year at $60,000;annually.;Required;(a) Prepare the cash budget for the period 1 April 2014 to 30 September 2014 for;Toggel Limited.;(b) Evaluate the benefits and problems associated with the participative style of;setting the budget.


Paper#74574 | Written in 18-Jul-2015

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