Foreword

We praise and thank the presence of the Almighty God for His blessings, grace, and gifts that have
enabled the author to complete the report entitled "Budgeting for Butterway Cookies Business". This
report is compiled as one of the requirements to fulfill the course of [Insert Your Course Name].

The report extensively discusses the process of preparing operational and financial budgets for
Butterway Cookies, a company engaged in the food and beverage industry in Yogyakarta. The
budgeting process is aimed at supporting the company's financial planning, control, and business
strategy to achieve sustainable growth.

The report comprises several chapters, starting with an introduction that outlines the background
issues, problem formulations, and research objectives. It is followed by Chapter 2, which delves
deeply into business budgeting, including the assumptions used, cost structure, and financial
projections. Furthermore, Chapter 3 presents conclusions drawn from the analysis conducted, along
with recommendations for the company.

The author acknowledges that this report is not without limitations and shortcomings. Therefore,
constructive feedback and criticism are highly appreciated for future improvements.

In conclusion, the author extends gratitude to all parties who have provided support, assistance, and
motivation in completing this report.

[Your City, Date of Report Completion]

[Your Name]

1
 Summary

This report aims to develop operational and financial budgets for Butterway Cookies, a company
specializing in cookie production in Yogyakarta. The budgeting process includes sales projections,
production cost estimates, monthly cash budgets, and balance sheet proformas. Through detailed
analysis, it has been found that cost control strategies and policies regarding accounts receivable and
payable are crucial for achieving operational and financial success for the company. As a
recommendation, it is essential to continuously monitor and evaluate budgets periodically, while
optimizing inventory policies to enhance operational efficiency and expand market share.

2
 Chapter 1: Introduction

1.1 Background of the Problem

The development of the food and beverage industry in Indonesia, particularly in major cities like
Yogyakarta, has shown dynamic and rapid trends. Consumer markets, especially among the youth and
adults, increasingly favor food products that are not only of high quality but also innovative in taste
and presentation. In this context, Butterway Cookies stands out as a company dedicated to meeting
the demands of consumers who expect unique and high-quality cookie products.

Since its establishment in 2024, Butterway Cookies has set its sights on becoming a market leader in
the cookie category by offering a variety of products that follow current trends. With its operational
base in Yogyakarta, the company strategically accesses dynamic and heterogeneous urban markets.

1.2 Problem Formulation

Despite the broad market potential and high product adoption possibilities, Butterway Cookies faces
several crucial challenges that need addressing. The main focus of this research problem formulation
includes:

1. How to effectively develop an operational budget that supports Butterway Cookies' business
growth in its first year of operation?
2. What cost control strategies can be implemented to ensure operational efficiency and financial
sustainability?
3. How can financial projections be utilized to establish realistic performance targets that can be
achieved?
4. 1.3 Objectives of the Study

The objectives of this study are as follows:

1) To develop an accurate and realistic operational budget for Butterway Cookies to support
financial planning and control.
2) To analyze effective cost control factors to optimize company expenditures.
3) To develop financial projections based on valid data to establish business goals and strategies
aligned with market potential and available resources.
4) Thus, Chapter 1 provides a clear overview of the background issues faced by Butterway Cookies,
the research-focused problem formulation, and the objectives to be achieved through this study.

3
 Chapter 2: Business Budgeting

2.1 Assumptions Used in Budgeting

a. Sales Projections

For Butterway Cookies, sales projections are based on the growth of the cake market in Yogyakarta
and market penetration strategies. We assume a 20% annual sales increase over the next 5 years,
with higher initial growth in the early years due to product introduction.

b. Production Volume or Inventory Estimates

We estimate producing approximately 50,000 cookies per month in the first year, gradually increasing
production to 100,000 cookies per month by the third year. Our inventory policy maintains sufficient
stock to meet demand for approximately 2 months ahead.

c. Production Cost Assumptions and Cost of Goods Sold (COGS)

Production costs per unit are estimated at Rp 5,000, with raw material and labor costs as variable
expenses. Factory overhead costs are projected at Rp 500 million annually, primarily fixed costs.
Marketing and administrative costs are estimated at 10% of sales revenue.

d. Sales and Non-Cash Purchase Policy

We will implement a sales policy with net 30-day payment terms to facilitate cash liquidity. For raw
material purchases, we will use a mix of cash and credit payments, with an average payment period of
60 days.

Conclusion

By formulating these assumptions, we aim to build a robust operational budget for Butterway Cookies.
These assumptions are based on thorough market analysis and operational strategies designed to
achieve sustainable growth and financial viability for the company.

2.2 Preparation of Operational Budgets

a. Sales Budget

Based on the earlier sales projections, the sales budget for Butterway Cookies for the first year is
estimated as follows:

 Cakes sold: 600,000 units per year (50,000 units per month × 12 months)
 Average selling price per unit: Rp 20,000
 Total sales revenue: Rp 12,000,000,000

b. Production / Merchandise Purchase Budget

 Estimated production costs for Butterway Cookies:

 Raw material cost per unit: Rp 5,000
 Total raw material cost: Rp 3,000,000,000 (600,000 units × Rp 5,000)
 Labor and factory overhead costs: Rp 2,000,000,000
 Total production cost: Rp 5,000,000,000

c. Production Cost Budget

 Production cost per unit: Rp 8,333 (Rp 5,000 + Rp 3,333 for labor and factory overhead)
 Total production cost for the first year: Rp 5,000,000,000

4
d. Commercial Expenses Budget

 Marketing and administrative expenses are estimated at 10% of sales revenue:

 Marketing and administrative expenses: Rp 1,200,000,000 (10% × Rp 12,000,000,000)

 Total commercial expenses: Rp 1,200,000,000

e. Profit and Loss Proforma

Based on the above budgets, the profit and loss proforma for the first year can be calculated as
follows:

 Sales revenue: Rp 12,000,000,000

 Production costs: Rp 5,000,000,000
 Commercial expenses: Rp 1,200,000,000
 Gross profit: Rp 5,800,000,000
 General and administrative expenses: Rp 500,000,000
 Marketing expenses: Rp 700,000,000
 Operating profit: Rp 4,600,000,000
 Interest and tax expenses: Rp 300,000,000
 Net profit: Rp 4,300,000,000
 Adjustments for Service-Based Businesses

For service businesses such as consultants or travel agents, budgets will include elements like:

 Revenue Budget: Based on projected services offered and rates charged.

 Labor Cost Budget: Labor costs for required service staff.
 General and Administrative Expense Budget: Daily operational costs such as office rent, utilities,
and administrative expenses.
 Marketing Expense Budget: Promotion costs and marketing activities to attract new clients.
 Profit and Loss Proforma: Calculating net profit based on service revenue minus all operational
costs.
By developing detailed and realistic operational budgets like these, Butterway Cookies or other
service-based businesses can effectively manage resources and take steps towards achieving set
financial goals.

2.3 Preparation of Financial Budgets

a. Accounts Receivable and Payable Budget

Monthly Budget (Rp)

Accounts Receivable 1.000.000.000
Accounts Payable 500.000.000

B. Anggaran Kas
Anggaran Bulanan (Rp)
Beginning Cash Balance 500.000.000
Cash Receipts 1.000.000.000
Production Cost Payments 500.000.000
Commercial Expense Payments 100.000.000
Accounts Payable Payments 500.000.000
Ending Cash Balance 1.400.000.000

C. Balance Sheet Proforma

Assets Projected End (Rp) Liabilities Projected End (Rp)
Cash 1.400.000.000 Accounts Payable 500.000.000

5
Accounts Receivable 1.000.000.000 Owner's Equity 1.900.000.000
Total Assets 2.400.000.000 Total Liabilities 2.400.000.000

Additional Notes:
These financial budgets are based on the projections and assumptions previously outlined, such as
sales projections and payment policies.
The balance sheet proforma is prepared to provide an overview of the company's financial position
and can be used as a tool to monitor financial health and make strategic decisions.
Using these tables, you can easily view the estimated financial budget for Butterway Cookies based on
the provided assumptions.

6
 Chapter 3: Conclusions and Recommendations

Conclusions

 Butterway Cookies has successfully developed detailed operational and financial budgets to
support business growth in its first year of operation.
 Realistic sales projections and effective cost control strategies have been key factors in achieving
a positive net profit.
 Accounts receivable and payable policies have been designed to ensure adequate cash liquidity.

Recommendations

 Continuously monitor and evaluate the budget periodically to identify deviations and take
necessary corrective actions.
 Expand marketing outreach and promotions to enhance brand awareness and expand market
share beyond Yogyakarta.
 Evaluate and optimize inventory policies to reduce storage costs and maximize operational
efficiency.

7
 Appendices

Appendix 1: Sales Projection Details

Table of sales projections for the first year based on the assumptions used.

Appendix 2: Production Cost and COGS Details

Breakdown of production costs per unit, including raw material costs, labor costs, and factory
overhead.

Appendix 3: Monthly Cash Budget

Table of monthly cash budget showing estimates of cash receipts and expenditures per month.

Appendix 4: Proforma Balance Sheet

Projected balance sheet for the first year based on the prepared financial budget.

Appendix 5: Details of Accounts Receivable and Payable Policies

Explanation of policies and procedures regarding accounts receivable and accounts payable payments
implemented.

8
 References
 Arnold, J., Hope, T., & Southworth, A. (2018). Managerial Accounting (7th ed.). Pearson
Education Limited.

 Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting for Managers (5th
ed.). McGraw-Hill Education.