Selling & Distribution Cost Budget

9. Administration Cost Budget
 This represents forecast of all administration expenses.
Ex:- Directors fees, managing directors salary,
office lighting, heating and air conditioning Most of these expenses are fixed.
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10. Capital Expenditure Budget
 This budget represents the expenditure on all fixed assets during the budget period It includes new buildings, machinery, land intangible items like patents
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Purposes
 To enable the company to establish a system of priorities in expenditure To correct capacity imbalance To provide a tool for controlling capital expenditure To make proper financial provision to meet planned expenditure To provide budgets for depreciation
&
maintenance cost for inclusion in the department expense budgets.
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11. Cash Budget
 Cash budget is one of the most important One of the last to be presented It is a detailed estimate of cash receipts from all sources & cash payments for all purposes & the resultant cash balances during the budget period It is a device for coordinating & controlling the financial side of the business to ensure solvency .
 It provides a basis for planning & financing required to cover up any deficiency in cash.
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Purposes
 It ensures that sufficient cash is available when required Indicates cash excesses & shortages so that action maybe taken in time to invest any excess cash or to borrow funds to meet any shortages Establishes a sound basis for credit Shows whether capital expenditure maybe financed internally Establishes a sound basis for control of cash position.
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Ex:-No Limit Textiles Ltd. Wishes to arrange overdraft facilities with its bankers during the period
April- June 2020 when it will be manufacturing mostly for stocks. Prepare a cash budget for the above period from the following data, indicating the extent of the bank facilities the company will require at the end of each month of the sales are realized in the month following the sales and the remaining 50% in the second month following. Creditors are paid in the month following the month of purchase. Cash at bank on 1
st
April
2020 is Rs.25,000.
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