Mathematical problem 02 (Budget)

Problem:

A company has four sales regions- 1, 2, 3, and 4.

Its salesmen are expected to sale the following g number of units, during the first quarter of 2012 assuming the average selling to be Tk. 30 per unit.

Priority/ Month	1	2	3	4
January	1000	1500	2500	3500
February	2000	1800	2800	4000
March	2500	2000	3000	4500

Prepare the sale budget.

Solution:

Sales Budget

(For the 1^st quarter of - 2012)

Division	January			February			March			Total (TK.)
	Units	Price	value	Unit	Price	Value	Units	Price	Value
1	1000	30	30000	2000	30	60000	2500	30	75000	165000
2	1500	30	45000	1800	30	54000	2000	30	60000	159000
3	2500	30	75000	2800	30	84000	3000	30	90000	249000
4	3500	30	105000	4000	30	120000	4500	30	135000	360000
Total			255000			318000			360000	933000

Mathematical problem 01 (Budget)

Problem:

A company manufactures 2 products – A and B. Its sales department has 3 divisions-

i.                    North;

ii.                  south ; and

iii.                East.

Preliminary sales budget for the year ending 31^st December, 2011 based on the assessment of the divisional management were:

Product A:      North: 200000 units,

South: 500000 units,

East: 100000 units.

Product B:      North: 300000 units,

                        South: 400000 units,

                        East:    (nil)

Sales price:     A – Tk 4 per unit;

                        B- Tk 3 per unit.

Arrangements are made for the extensive advertisement of product A and B. And it is estimated that north division sales will increase by 100000 units.

Arrangements are also made to advertise and distribute product B in the Eastern area in the 2^nd half of 2011. Funds raised are expected to be 500000 units.

Since the estimated sales of the south division represented on unsatisfactory target, it is agreed to increase both the estimates by 10%.

Prepare sales budget for the year to 31^st December, 2011.

Solution:

Sales Budget

(For the Year- 2011)

Division	A			B			Total (Tk)
	Units	Price	Value	Units	Price	Value
North	300000	4	1200000	400000	3	1200000	2400000
South	550000	4	2200000	440000	3	1320000	3520000
East	100000	4	400000	50000	3	1500000	1908000
Total			3800000			4020000	7820000

Different types of Budget

Different types of budgets have been developed keeping in view their necessity. Budget can be classified on the basis of coverage, capacity, condition and period.

Types of Budget

 Functional Budget

Functional budget is a budget which relates to any of the functions of any under takings, e.g., sales, production, research and development, etc. commonly used functional budgets are-

i.                    Sales budget,

ii.                  Production budget,

a.      Raw material budget,

b.      Labor budget,

c.       Plan utilization budget,

d.      Overhead budget.

iii.                Purchase budget,

iv.                Capital expenditure budget,

v.                  Administration budget,

vi.                Cost budget,

vii.              Research and development budget.

Sales budget

The sales budget is the foundation upon which the other functional budgets are prepared. So, sales budget being the principal factor and is the most important budget and forms the basis on which all other budgets are prepared. I brief, sales budget is the statement of planned sales in terms of quantity and value and analyzed byproducts.

For forecasting sales, it is necessary to consider the following factors:

a.      Historical analysis of sales,

b.      Market analysis,

c.       Salesman’s estimates,

d.      General trade and business conditions,

e.      Report of salesman,

f.        Special conditions,

g.      Seasonal fluctuations,

h.      Financial aspects,

i.        Adequate return on capital employed,

j.        Competition,

k.      Planned capacity,

l.        Sales promotions,

m.   Customers’ tastes,

n.      Policy of the concern,

o.      Government intervention,

p.      Government policy regarding export and import,

q.      Product profitability,

r.       Tax policy.

Criticism of Budgets of Bangladesh

After the immediate declaration of budget of Bangladesh Government, it is usually noticed that the economists of Bangladesh come forward with their comments on published budget.

The followings are the usual points which are commented by the economists:

i.    Measures have been taken to maintain the rate of taxes at reasonable and flexible.

ii.   Tax collection procedure has been easier.

iii.  Attention has been given to protect the interest of the local industries in the case of indirect taxes.

iv.  Protection in the small industries has been given in such a way that will have survived our local industries. As a result, this will help to increase the establishment of backward linkage industries.

v.  Everyone appreciates the policy which gives the financial allowances for the old aged people, destitute, widows and divorced women.

vi. VAT policy, which is followed by the budget, is another new dimension to collect government revenue.

vii.  Increased allocation for the education sector and agriculture sectors is considered as a positive step for the developing country like Bangladesh.

viii. National budget addresses the stipend for female education, female illiteracy rate and results.

ix.     Tax exemption from the new materials of the industrial goods will be helpful for boosting exports.

x.  General consumers will be benefitted as a result of the exemption from all kinds of food grains and fertilizers for the boost up of agriculture sectors.

xi.     National budget also address the capital market and try to apply necessary steps to make it strengthen and as a result investment is encouraged for the potential investors.

xii.   The agriculture productivity will increase for providing subsidiary to the tune one TK 100 -300 crore in this sector.

xiii.  The growth rate of the budget is seemed to be ambitious, and set at 7%. But it will be challenging to attain.

xiv.   The previous budget were very big and we think that were not realistic.