N5 Entrepreneurship


5 Overhead budget This budget should provide all the production costs other than direct materials and direct labour. A predetermined overhead rate is developed and applied to units of production throughout the budget period. This budget makes provision for the calculation of cash disbursements (payments) for manufacturing overheads that will be used in the cash budget. The budget is compiled as follows:


Budgeted labour hours × variable overhead rate = budgeted variable overhead + budgeted fixed overhead = total budgeted overhead = cash payments for overheads


5 Overhead Budget Budgeted direct labour hours


Variable overhead rate/hour Budgeted variable overheads Plus budgeted fixed overheads Total budgeted overhead


The R5 is an average calculated over time.


315 R5


R1575 5 R7500 R9075


Retail (Merchandising) purchases budget


If you have a retail (merchandising) business where you have to buy goods from suppliers, you will have a merchandising purchases budget. The format is similar to that of a production budget.


Budgeted cost of goods sold + desired ending inventory = total needs -


beginning inventory = required purchases Other budgets used in businesses are:


6 Selling and administration budget This budget is made up of smaller individual budgets that were submitted by various people who have control over selling and administration sections in the business.


7 Cash budget This is a forecast of the cash receipts and disbursements (payments) against which the actual cash situation is measured. The cash budget usually consists of the following sections: • the receipts section (money in) • the disbursement section (money out) • the cash excess or deficiency section • the financing section ( i.e. loans)


The receipts section consists of the opening cash balance plus the expected cash receipts for the budget period. The disbursement section consists of all the payments that are planned for the budget period. The cash excess or deficiency section consists of the difference between the total of the cash receipts and that of the disbursement section. If there is a surplus of funds, borrowed funds can be repaid or funds can be invested. If there is a shortage of funds (deficiency), the business will have to arrange for borrowed funds from a bank.


The financing section provides a detailed picture of the borrowings and repayments forecasted during the budget period.


126


Fixed overheads include telephone, rent, salaries etc.


This is what a cash-flow statement is all about!


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156  |  Page 157  |  Page 158  |  Page 159  |  Page 160  |  Page 161  |  Page 162  |  Page 163  |  Page 164  |  Page 165  |  Page 166  |  Page 167  |  Page 168  |  Page 169  |  Page 170  |  Page 171  |  Page 172