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Estimated Sales Rs. 80,000 Rs. 1,00,000
Level Level
Unit 9: Budgetary Control
Fixed Overhead
Advertisement on Radio 2,000 2,000
Advertisement on TV 12,000 12,000
Salary to Sales Admin. Staff 20,000 20,000 Notes
Salary to Sales force 15,000 15,000
Expenses of the sales dept – Rent 5,000 5,000
Total Sales Fixed Overhead (A) 54,000 54,000
Variable Overhead
Salesmen’s Commission 2% 1,440 10,290
Agents’ Commission 6.5% 520 682.5
Carriage outward 5% 4,000 5,000
Total Variable Overhead (B) 5,960 5682.5
Total Sales overhead(A+B) 59,960 59682.5

Cash Budget

Cash budget is nothing but an estimation of cash receipts and cash payments for specified
period. It is prepared by the head of the accounts department i.e. chief accounts officer.
The utility of the cash budget is as follows:

1. To meet the revenue and capital expenditures with adequate funds.
2. It should highlight the additional requirement cash whenever the need arises.
3. Keeping of excessive funds available in the business firm would not fetch any return to the
enterprise but this estimate of future cash needs and resources will guide the firm to plan
for an effective investment out of the surplus funds estimated; enhances the wealth of the
investors through proper investment planning out of the future funds available.
Cash budget can be prepared in three different ways:
1. Receipts and payments method
2. Adjusted profit and loss account
3. Balance Sheet Method
Cash receipts can be classified into various categories:

Figure 9.6

Cash Receipt

Sale Debtors Bills receivable Dividends Sale of Investments

Other Incomes

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