1. Dickson Manufacturing Company
2006 Budget
Conclusion
1. Cash Requirement
Is loan required?
2. Exchange Risk
How far will PNL change by 1% increase in RMB?
3. Cash Cycle control on working capital change and loan requirement?
4. Other Risk?
2. Dickson Manufacturing Company
General Description Goto Assumptions
- A manufacturing Company being engaged in production of product X
- The company has 7 departments
* General Management
* Finance
* Human Resources
* Production
* Supply Chain
* Quality Control
* Product Development
- A simplified version of budget which just focus on Sales, Cost of Goods Sold, Direct Labor, Depreciation & fina
- It is only for illustration purpose, not sufficient to build up a full version of budget in a company
- Manufacturing Overhead include Production/Supply Chain/Quality/Engineering
Administration Expenses include General Management/Finance/Human Resources
For simplicity, overhead is not absorbed in the material cost and there is no purchase burden(inward freight) for
- No consideration for accruals in balance sheet
- Stock Days
Today stock is for tomorrow production/sales Goto Stock Day Illustration
- Debtors
Today accournt receivables is sales incurred this month and the previous one
- Creditors
Today accournt payables is purchase incurred this month and the previous one
3. oto Assumptions
irect Labor, Depreciation & finally the Balance Sheet
et in a company
hase burden(inward freight) for material
4. Dickson Manufacturing Company
2006 Budget
Assumptions: Price Qty Jan-06 Feb-06 Mar-06
1. product group sales 17.80 2,751,000 204,000 82,000 184,000
2. BOM
Parts Usage Cost Cur Ex Rate U.Cost
i Mechanism 1 8.11 USD 8.11 1.00
ii Plastic 2 2.00 RMB 1.00 2.00
iii Packing 2 1.30 RMB 1.00 1.30
---------------
11.41
3. Production Capacity
Working Hours/day 8
Output/hour/line 150
Output/day 1,200
Working Day 248 21 15 23
Working Hours Needed 1,360 547 1,227
Lines required 9 5 7
Workers/Line 42
Line Leader 1
A. Leader 2
Material Feeder 4
Workers 35
Backup Workers 3
Existing Line 7 7 7 7
Hours thereon 1,176 840 1,288
Total OT Hours 184 - -
OT Hours/Line 26 - -
Production line increment - - -
Cost 800,000
Inspectors/Line 4
4. % in Salary Adj. 6%
5. Upper Limit of Income for Medical Insurance
Medical 5,640
10. Dec-03 Go Back to Assumptions
Stock Value 8,500
Stock Days #VALUE! days
Jan-04 Feb-04 Mar-04 Apr-04
Cost of Goods Sold 3,253 1,540 3,548 4,500
Stock Value 8,500
Cost of Goods Sold Days
Jan-04 3,253 30
--------------
5,247
Feb-04 1,540 30
--------------
3,707
Mar-04 3,548 30
--------------
159
Apr-04 4,500 1
-------------- --------------
- 91
18. Headcount Explanation
1. New Staff join in different months, not necessary being on board on J
2. Number of production line operators & Inspectors depends on instalm
6
6
6
06
6
-0
-0
-0
-0
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3. The company follows labor regulation and apply for consoliated work
1 1 1
1 1 1 4. The company does not pay income tax for staff, only does tax equaliz
5. Production operators & inspectors are working overtime based on pro
1 1 1
1 1 1
1 1 1
3 3 3
Goto Detail Headcount
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
2 2 2
2 2 2
1 1 1
2 2 2
2 2 2
1 1 1
1 1 1
2 2 2
20 20 20
1 1 1
20. ssary being on board on Jan
ectors depends on instalment of production line
pply for consoliated working hours, i.e. OT Pay on Saturday is 1.5 times of normal wages
aff, only does tax equalization for GM & Financial Controller
ng overtime based on production needs