Budgeting Project Report

COMM 210

Edwards School Of Business

Professor: Gerry Visentini

By: Dawsar Abdelhadi, Tyler Almen

Vicspiks Ltd is a diligent company that wants to create a master budget to optimize their

financial situation. By creating a master budget, the company would achieve their financial

goals, achieve their financial goals in the future, and help companies during bad economic times.

A selling price change scenario to increase the price and commission rate was suggested. A

sensitivity (what-if) analysis to help the company make a successful financial decision.

Introduction

Vicspiks Ltd is a hard-working company that specializes in creating pickleballs. A

Master budget is a way to budget a firms financing using a Beginning balance sheet, Sales

budget, Schedule of receipts, Production budget, Direct materials purchases budget, Schedule of

disbursements for materials, Direct labor budget, Overhead budget, Selling and administrative

budget, Cash budget, Cost of goods manufactured budget, Cost of goods sold budget, Budgeted

income statement (using absorption costing), and Budgeted classified balance sheet.

First, the Beginning balance sheet is a general balance sheet showing assets, liabilities,

and SE. Second, a sales budget is a budget used to find the total number of sales by multiplying

budgeted sales units by the selling price (Brewer et al., 2024). Third, the Schedule of receipts in

a master budget indicates when cash receipts are expected from customers within a specified

time (Bragg, 2024). Fourth, the Production budget is a “detailed plan showing the number of

units that must be produced during a period in order to meet both sales and inventory needs.”

(Brewer et al., 2024). Fifth, the Direct materials purchases budget indicates the number of raw

materials that Vicspiks Ltd must purchase to meet the correct production and inventory levels
(Brewer et al., 2024). Sixth, the Schedule of disbursements for materials depicts the budgeted

cash payments for purchases during a given period (Irfanullah Jan, ACCA, 2011). Seventh, the

Direct labor budget is a budget that shows labor requirement needed for Vicspiks Ltd over time

(Brewer et al., 2024). It calculated by multiplying the number of units of products to be produced

in a period by the number of DL hours that one unit produces (Brewer et al., 2024). Eighth, the

Overhead budget is a budget that shows all costs except for direct materials and direct labor.

Ninth, the Selling and administrative budget provides the expenses in non-Manufacturing-related

areas. Tenth, the Cash Budget is created from the previously made budgets and consists of

receipts, disbursement, cash excess/deficiency, and a financing section (Brewer et al., 2024).

Next, the Cost of goods manufactured budget is used to calculate the manufacturing costs spent

on the budgeted finished goods (Irfanullah Jan, ACCA, 2011). Lastly, the Budgeted income

statement describes the company's planned profits for the upcoming budgeting period and is used

to evaluate the company's performance (Brewer et al., 2024). While the Budgeted classified

balance sheet is adjusted to the information in the other budgets.

Discussion of the importance of budgeting

Budgeting in business is an essential part of managerial accounting as it helps organizations to

become financially successful. According to my textbook readings, budgeting is important in

business because it helps achieve organizations financial goals, help organizations achieve goals

in the future, and help companies during bad economic times, and help organizations make wiser

decisions in their future (Brewer et al., 2024). First, according to the textbook, budgeting helps

companies achieve their financial goals as it helps achieve “managements' objectives for sales,

production, purchasing, distribution, and financing activities.” (Brewer et al., 2024). Moreover,
budgeting is essential in financing because it “helps guide and coordinate the firm’s activities

among all of these areas.” (Brewer et al., 2024). Second, it helps organizations achieve any goals

in the long term. For example, according to the textbook, “Boeing 737 MAX 8 fleet was

grounded around the world while Boeing sought to solve the puzzle of the cause of the crash and

developed sustainable solutions to prevent future crashes of this type” (Brewer et al., 2024).

Preventing crashes would solve Boeing money and ensure that the company is financially stable.

Third, budgeting is important because it helps companies during unstable economic conditions.

According to the textbook, “the importance of budgeting is magnified during times when

resources are limited or when resources are limited or when there is economic uncertainty

resulting from unforeseen events” (Brewer et al., 2024). Lastly, budgeting is important because it

helps organizations make wiser decisions in their finances. In conclusion, budgeting is important

because it helps organizations reach their financial goals, makes them more efficient in bad

economic times, and helps them make more informed decisions in the future.

Discussion of the company’s financial position and financial outlook (with

reference to the Base Master Budget)

The company’s financial position and financial outlook for Vicspiks Ltd points towards a

successful and profitable future. First, according to the budgeted income statement, the company

made a net income of $848,033 in the year 2025. Second, the assets $3,384,387 of the

company are greater than its liabilities $958,030. This puts the company in a strong financial

position because they can cover their liability with their assets. Lastly according to the Cash

budget, the company has a positive Cash ending balance of $420,267. This means the company
has cash on hand in case of an emergency.

Discussion contrasting the Base Master Budget scenario and Selling Price

Looking at the net income from the original master budget and change scenario, I could

see that the increase in price from $48.00 per paddle to $53.00 per paddle and increase in

commission rate from 4% to 8% has made some changes. First, the profits of the company were

positively affected as net income increased from $884,033 to $1,024,360. Second, a positive

effect of the new selling price change is the decrease in the ending cash balance from $420,267

to $350,113. This is happening because with the price change and the commission change, our

selling and administration expenses and income tax go up as well, creating less on hand cash.

Lastly, the assets were not affected by much on the budgeted balance sheet. However, the

company's liabilities went up from $958,830 to $974,769, resulting from the commission change.

Recommendations (including with respect to the proposed selling price

change)

Looking at both the base master budget and the selling price change, the company has

many advantages by choosing the selling price change. If Vicspiks Ltd is looking to maximize

net income, the company should follow the selling price change. Moreover, if Vicspiks Ltd is

looking towards increasing their ending cash balance and lowering liabilities, then the company

is in favor by following the selling price change. In summary, if Vicspiks Ltd future goals align

with the advantages that comes with the selling price change then the company will be directed

towards success.

References
Bragg, S. (2024, August 10). Schedule of expected cash collections. AccountingTools.
[Link]

Brewer, P. C., Garrison, R. H., Noreen, E. W., & Montague, N. R. (2024). Introduction to
managerial accounting. McGraw Hill.

Irfanullah Jan, ACCA. (2011). Cost of goods manufactured budget. Format | Example.
[Link]

Irfanullah Jan, ACCA. (2011). Schedule of expected cash payments. Format | Example.
[Link]

Appendixes

 Appendix 1: Section from textbook: pages: (273-288):

 Appendix 2: Section from the textbook: pages (269-271):

(Brewer et al., 2024)