Teleshop Namibia Ltd (TeiNam) is a Namibian based company that manufactures a component required in the...

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Teleshop Namibia Ltd (TeiNam) is a Namibian based company that manufactures a component required in the telecommunications industry. The company prepares budgets on a quarterly basis. You have recently joined the company as a management accounting intern and have been tasked to assist the company in the preparation of their cash budget for the forthcoming period. You have thus been presented with the following information 1. The company's bank account will be having a debit balance of NS100 000 by end of December 2021. 2. Each quarter is expected to generate sales units as follows Sales units Quarter 1 Quarter 2 Quarter 3 Quarter 4 4 000 4 100 4 600 5 500 The projected selling price is NS120 per unit. 7Ox of the customers will pay cash, and of these customers. 30% qualily for a cash discount of 5%. The rest of the customers are on credit and they settle their accounts in the same quarter as the sale. Bad debts are estimated to be 5% per quarter. 3. The production schedule for 2021 is as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Units 4 600 5 500 5 700 6 200 4. The direct labour per each component is 0.6 hours paid at NS20 per hour in cash. 5. Direct materials will be purchased as follows NS Quarter 1 Quarter 2 Quarter 3 230 000 250 000 260 000 290 000 Quarter 4 60% of the materials are on credit and the balance on cash. The payment of credit purchases materials is done as follows: 75% in the quarter 25% in the following quarter. The purchases for the fourth quarter of 2020 are expected to be NS340 00. 6. Fixed manufacturing overheads will be paid in the quarter in which they are incurred. TelNam has budgeted for faxed costs at NS200 000 for each quarter. Depreciation at a rate of $20 000 per quarter is included in this amount. 7. The variable manufacturing overheads will NS5 per direct labour hour and are paid for in the quarter in which they incurred. It is anticipated that they will increase by 10% on 1 October 2020. 8. Fixed selling and administrative expenses will amount to NS50 000 per quarter and will be paid for in the quarter in which they occurred. 9. Variable seling and administrative expenses will be NS6 per unit. 10. A dividend of NS0.07 per share will be paid at the end of the second quarter. The issued share capital on 31 December 2021 will be NS800 000 and wil be made up as follows: 250 000 ordinary shares issued at NS2 each 1 July 2010; and • 100 000 ordinary shares to be issued at NS3 each on 01 July 2020. Requirement Marks Showing all the necessary workings, prepare the cash budget for TelNam for 1.1 35 the year 2021 1.2 Identify ways in which TelNam can improve their cash flow N.B. Where applicable show all workings. Total 38 3. Teleshop Namibia Ltd (TeiNam) is a Namibian based company that manufactures a component required in the telecommunications industry. The company prepares budgets on a quarterly basis. You have recently joined the company as a management accounting intern and have been tasked to assist the company in the preparation of their cash budget for the forthcoming period. You have thus been presented with the following information 1. The company's bank account will be having a debit balance of NS100 000 by end of December 2021. 2. Each quarter is expected to generate sales units as follows Sales units Quarter 1 Quarter 2 Quarter 3 Quarter 4 4 000 4 100 4 600 5 500 The projected selling price is NS120 per unit. 7Ox of the customers will pay cash, and of these customers. 30% qualily for a cash discount of 5%. The rest of the customers are on credit and they settle their accounts in the same quarter as the sale. Bad debts are estimated to be 5% per quarter. 3. The production schedule for 2021 is as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Units 4 600 5 500 5 700 6 200 4. The direct labour per each component is 0.6 hours paid at NS20 per hour in cash. 5. Direct materials will be purchased as follows NS Quarter 1 Quarter 2 Quarter 3 230 000 250 000 260 000 290 000 Quarter 4 60% of the materials are on credit and the balance on cash. The payment of credit purchases materials is done as follows: 75% in the quarter 25% in the following quarter. The purchases for the fourth quarter of 2020 are expected to be NS340 00. 6. Fixed manufacturing overheads will be paid in the quarter in which they are incurred. TelNam has budgeted for faxed costs at NS200 000 for each quarter. Depreciation at a rate of $20 000 per quarter is included in this amount. 7. The variable manufacturing overheads will NS5 per direct labour hour and are paid for in the quarter in which they incurred. It is anticipated that they will increase by 10% on 1 October 2020. 8. Fixed selling and administrative expenses will amount to NS50 000 per quarter and will be paid for in the quarter in which they occurred. 9. Variable seling and administrative expenses will be NS6 per unit. 10. A dividend of NS0.07 per share will be paid at the end of the second quarter. The issued share capital on 31 December 2021 will be NS800 000 and wil be made up as follows: 250 000 ordinary shares issued at NS2 each 1 July 2010; and • 100 000 ordinary shares to be issued at NS3 each on 01 July 2020. Requirement Marks Showing all the necessary workings, prepare the cash budget for TelNam for 1.1 35 the year 2021 1.2 Identify ways in which TelNam can improve their cash flow N.B. Where applicable show all workings. Total 38 3.

Answer rating: 100% (QA)

Answer to 11 Cash Budget of TelNam Particulars Amount in N Quarter 1 Quarter 2 Quarter 3 Quarter 4 Opening cash balance a 209538 185278 154424 59810 C... View the full answer