Budgeting for Success: Maximizing Efficiency and Profitability

Question 1

Answer

The key components of Excel Berhad's budgeting plan for the upcoming months include budgets for finished inventories, raw materials inventories, and cash flow for August and September.

Excel Berhad, a manufacturer of the Nexus product line, has a detailed budgeting plan in place to ensure smooth operations and financial stability. Let's dive into the key components of their budgeting plan:

1. Finished Inventories Budget:

Excel Berhad plans to prepare a finished inventories budget expressed in units of Nexus for the months of July, August, and September. This budget will help them monitor the production levels and ensure that they have enough finished goods to meet the planned sales requirements for each month.

2. Raw Materials Inventories Budget:

The company also plans to create a raw materials inventories budget expressed in kilograms of the raw material for July and August. This budget will help them manage their raw material procurement and ensure that they have enough stock to meet production demands.

3. Cash Budget:

Excel Berhad will prepare a cash budget for August and September to track the inflows and outflows of cash during these months. This budget is crucial for managing liquidity and ensuring that the company has enough funds to cover its expenses and investments.

By meticulously planning and monitoring these budgets, Excel Berhad aims to optimize efficiency, reduce costs, and maximize profitability in the coming months.