The document provides details on the procedure and components of a master budget for Wahid Industries. It includes determining key factors, making sales, production, and financial forecasts. The main budgets outlined are the sales budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, selling and administrative budget, schedule of expected cash collections, cash budget, and budgeted income statement. All of these individual budgets feed into the overall master budget to forecast revenues, costs, cash flows, and profits.

1. Wahid
Industries
Master
Budget

3. – Budgeted Procedure:
The procedure followed while designing and operating a budgetary
control system depends upon the nature of the business.
The procedure as follows:
– Determination of key factor:
Key factor is that factor the extent of whose influence must first be
assessed in order to ensure that functioned budgets are reasonably
capable of fulfillment.
Ex: Sales, production, purchases, cash etc.
Key factor must be identified & diagnosed. Budget are meaning & unless
key factor identified.

4. – Making of forecasts:
– Forecast is nothing but estimation of probabilities for a
given period. Forecasts are made regarding sales,
production cost and financial req.
– Preparation of budgets:
After finalization of forecasts the budgets will be prepared.

5. Master Budget
Master Budget
Operating Budget
Sales Budget
Production Budget
Direct Material Budget
Direct Labor Budget
FOH Budget
Selling & Admin Budget
Collections Budget
Financial Budget
Schedule of Cash Receipts
Cash Budget

6. Master Budget
Operating Budget
Sales Budget
Production
Budget
Direct
Material
Budget
Direct Labour
Budget
FOH Budget
Sellin & Admin
Budget
Collections
Budgt
Financial Budget
Budgeted Income
Statement
Schedule of Cash
Receipts
Cash Budget

7. Operating Budget
– . It contains estimates of the total value of resources required
for the performance of the operation including reimbursable
work or services for others.
– There are following types of operating budget:
– Sales Budget
– Production Budget
– Direct Material Budget
– Direct Labour Budget
– Factory Overhead Budget
– Selling & Administrative Budget

8. Sales Budget
Sales budget is the first and basic component of master
budget and it shows the expected number of sales
units of a period and the expected price per unit. It
also shows total sales which are simply the product
of expected sales units and expected price per unit.

9. Sales Budget
Pak Fan(Ceiling Fan)
Description Quarter 1 Quarter 2 Quarter
3
Quarter
4
Total
Sales Units 729 1,062 310 270 2371
Price Per
Unit
2,700 2,700 2,700 2,700 2,700
Total sale 1,968,300 2,867,400 837,000 729,000 6,401,700

10. Production Budget
This budget shows the number of units of each good
expected to be produced.
Production budget is a schedule showing planned
production in units which must be made by a
manufacturer during a specific period to meet the
expected demand for sales and the planned finished
goods inventory

11. Production Budget of Deluxe Ceiling Fan
Production Budget
Description Q1 Q2 Q3 Q4 Total
Budgeted Sales 729 1062 310 270 2371
Ending 318 93 81 218 218
Available for
Production
1047 1155 391 488 2589
Less Opening 190 318 93 81 190
Units To be
Produced
857 837 298 407 2399

12. Direct Materials Budget
 Direct material purchases budget shows budgeted beginning and
ending direct material inventory, the quantity of direct material that
will be used in production, the amount of direct material that must
be purchased and its cost during a specific period
 The direct material includes
 1 Rod
 1 Motor
 3 Blades
 Misc.
 We assume these 4 items as 1 unit.

13. Description Q1 Q2 Q3 Q4 Total
Fans 839 962 210 320 2331
Direct Material
per Fan
1 1 1 1 1
Total Units
Material Required
839 962 210 320 2331
Production Budget
Column1 Q1 Q2 Q3 Q4 Total
Total Material
Required
857 837 298 407 2399
Add Ending 288 89 122 257 150
Material Available 1145 926 420 664 2549
Less Opening 255 288 89 122 255
Direct Material
Used
890 638 331 542 2294
Material Cost Per
Unit
1535 1535 1535 1535 1535
Total Cost Of
Material
1366150 979330 508085 831970 3521290

14. Direct Labor Budget
Direct labor budget shows the total direct labor cost and
number of direct labor hours needed for production. It
helps the management to plan its labor force
requirements. Direct labor budget is a component of
master budget. It is prepared after the preparation of
production budget because the budgeted production in
units figure provided by the production budget serves as
starting point in direct labor budget.

15. The company pays wages to its employees on the bases of
number of units produced, The total wages from all departments
is Rs.130 per unit.
Direct Labor Budget
Labor
Description Q1 Q2 Q3 Q4 Total
Units Produced 857 837 298 407 2399
Wages Per Unit 130 130 130 130 130
Total Direct
Labor Cost
111410 108810 38740 52910 311870

16. Manufacturing Overhead Budget
The factory overhead budget shows all the planned
manufacturing costs which are needed to produce the
budgeted production level of a period, other than
direct costs which are already covered under direct
material budget and direct labor budget. The
overhead budget is an operational budget contained
in the master budget of a business. It has two
sections, one for variable overhead costs and other
for fixed overhead costs.

17. Manufacturing Overheads Budget
Manufacturing Overhead Budget
Description Q1 Q2 Q3 Q4 Total
No. Units 839 962 210 320 2331
Variable Rate x40 x40 x40 x40 x40
Total Variable 33560 38480 8400 12800 93240
Fixed FOH +96040 +96040 +96040 +96040 +37296
0
Total FOH 129600 134520 104440 108840 466200

18. Selling & Admin. Budget
Selling and administrative expense budget is a
schedule of planned operating expenses other
than manufacturing costs. It is a component of
master budget and it is prepared by all types of
businesses (i.e. manufacturers, retailers and
service providers) before the preparation of
budgeted income statement.

19. Selling & Admin. Budget
Selling And Admin
Description Q1 Q2 Q3 Q4 Total
Budgeted Sales 729 1062 310 270 2371
Variable Rate 25 25 25 25 25
Variable Selling
And Admin
18225 26550 7750 6750 59275
Fixed Selling &
Admin
59275 59275 59275 59275 237100
Total 77500 85825 67025 66025 296375

20. Financial budget
Definition:
Financial budgets are financial plans that are structured to detail projections
on incomes and expenses on both a long-term and a short-term basis. Budgets
of this type normally incorporate aspects of other types of budgeting
strategies, including the preparation of a detailed budgeted balance sheet, a
section that functions as a cash flow budget and addresses the receipt of
income and the flow of expenses on an annual, semi-annual, and a monthly
basis. It typically covers a period of at least one year, although it is not unusual
for some organizations to prepare this kind of budget to cover anywhere from
two to five years at a time.

21. Schedule of Expected Cash
Collections
Schedule of expected cash collections from
customers shows the budgeted cash
collections on sales during a period. It is
a component of master budget and it is
prepared after the preparation of sales
budget and before the preparation of cash
budget.

22. Schedule of Expected Cash Receipts
Description Q1 Q2 Q3 Q4 Total
Sales 729 1062 310 270 2371
Total Receivables 1968300 2867400 837000 729000 6401700
Cash Payment 984150 1433700 418500 364500 3200850
25% of previous Quarter - 492075 716850 209250 1418175
25% of preceding 2nd - - 492075 716850 1208925
Total Receipts of Quarter 2952450 4793175 2464425 2019600 12229650

23. Cash Budget
Cash budget is a financial budget prepared to
calculate the budgeted cash inflows and outflows
during a period and the budgeted cash balance at
the end of the period. Cash budget helps the
managers to determine any excessive idle cash or
cash shortage that is expected during the period.

24. Cash Budget
Cash Budget
Description Q1 Q2 Q3 Q4 Total
Opening Balance 3000000 3665340 7403940 1886510 5000000
Cash Receipts 2952450 4793175 2464425 2019600 12229650
Total Cash
Available
5952450 8458515 9868365 3906110 17229650
Less Payments 2287110 1054575 367615 784415 4493715
Exess or Shortage 3665340 7403940 9500750 3121695 12735935
Financing - - - - -
Repayment - - - - -
Excess 3665340 7403940 1886510 3358615 12735935

25. Budgeted Income Statement
The budgeted or pro forma income statement is
prepared after the operating budgets have been
completed. The cost of goods sold on the income
statement is calculated using the per unit cost of
Rs.1795.857 , which consists of Rs.1535 per unit
for direct materials, Rs.130.00 per unit for direct
labor, and a manufacturing overhead rate of
Rs.40.00 . Fixed factory overheads were
Rs.96040 per quarter.

26. Budgeted Income Statement
Budgeted Income Statement
Description RS
Sales 2371x2700 6401700
Less CGS -4186140
Gross Profit 2215560
Sellin and Admin -296375
Net Profit 1919185