Advanced Management Accounting Business Budget

Assignment on Business Budget

To be submitted on or before 10/06/2022

Problem on Preparation of Flexible Budget

1. Prepare a Flexible Budget for the production at 90% (9,000 units) on
the basis of the following information:
Particulars Amount
Production at 50% capacity 5,000 units
Raw materials Rs. 75 per unit
Direct labour Rs. 45 per unit
Direct Expenses Rs. 20 per unit
Factory expenses Rs. 6,00,000 (40% fixed)
Administration expenses Rs. 4,00,000 (50% variable)

2. The budgeted expenses at 10,000 units of production are :

Particulars Per
Unit
Direct Materials 60
Direct Labour 30
Variable Overheads 20
Fixed Overheads (₹. 1,60,000) 16
Variable Expenses (Direct) 5
Selling Expenses (20% fixed) 15
Administration Expenses ( ₹.50,000 5
fixed)
Distribution Expenses ( 20% fixed) 5
Total 156
Prepare Flexible Budget for 7,000 Units
Problem on preparation of Flexible Budget when Semi-variable Expenses
vary with capacity utilisation
3. X Co. produces a standard product, whose estimated cost per unit is given as
follows:
Particulars Amount
(Rs.)
Raw material 10
Direct wages 8
Direct Expenses 2
Variable Overheads 2

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Advanced Management Accounting Business Budget

Semi-variable Overheads at 100% activity level (10,000 units) are expected to be Rs.
40,000 and these Overheads vary in steps of Rs. 2000 for each change in output of
1,000 units.
The Fixed Overheads are estimated at Rs.50,000. The selling price per unit is
expected to be Rs.40.
Prepare a Flexible Budget at 50%, 70% and 90% levels of activities.
During the same period, the following expenses were incurred for producing 7,000
units. Present the budget report to the management in a suitable form.
Particulars Amount
(Rs.)
Materials 69,500
Direct wages 56,600
Direct expenses 14,100
Variable Overheads 35,100
Fixed Overheads 70,000

Problem on statement showing receipts on sales

4. Sales in January, February and March 2018 amount to Rs.1,40,000, Rs. 1,80,000
and Rs. 2,20,000 respectively. Of these sales, 25% are on cash basis and a credit
period of one month is allowed to debtors. A cash discount of 2% is allowed on cash
sales. You are required calculate the amount of cash received during the months of
February and March.
Problem on preparation of Cash Budget)
5. Prepare a cash budget for three months, commencing from 1 June, when the Cash
Balance was Rs.1,56,400.
Month Sales Purchases Wages Factory Selling
expenses expenses
April 80,000 41,000 5,600 3,900 10,000
May 76,000 40,000 5,400 4,200 14,000
June 78,000 38,000 5,400 5,100 15,000
July 90,000 37,000 4,800 5,100 17,000
August 95,000 35,000 4,700 6,000 13,000
Additional information:
(a) 20% of sales is on cash basis.
(b) Customers are allowed a credit period of two months.
(c) Suppliers allow a credit period of one month.
(d) Lag in payment of wages is one month.
(e) Lag in payment of Factory Expenses is half a month.
(f) Lag in payment of Selling Expenses quarter of a month.

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Advanced Management Accounting Business Budget

Problem on preparation of Cash Budget)

6. ABC Ltd., a newly started company, wishes to prepare Cash Budget from January
2018. Prepare a Cash Budget for the first six months from the following estimated
revenue and expenses.
Month Total Sales Materials Wages Production Selling and
Overheads Distribution
Overheads
January 20,000 22,000 4,000 3,200 800
February 22,000 14,000 4,400 3,300 900
March 28,000 14,000 4,600 3,400 900
April 36,000 22,000 4,600 3,500 1,000
May 30,000 20,000 4,000 3,200 900
June 40,000 25,000 5,000 3,600 1,200

Cash Balance on 1 January was Rs.10,000.

A new machine is to be installed at Rs.20,000 on credit, to be repaid in two equal
instalments in March and April.
Sales Commission at 5% on Total Sales to be paid after a month, following the actual
sales.
Rs.10,000 being the amount of second call may be received in March. Share
Premium, amounting to Rs.2,000, is also obtainable with the second call.
Period of credit allowed by suppliers 2 months
Period of credit allowed to customary 1 month
Delay in payment of Overheads: 1 month
Delay in payment of wages ½ months
Assume Cash Sales to be 50% of Total Sales.

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