The statement of financial position of Pies and Cakes Ltd at 30 June 2018 was expected to

Question:

The statement of financial position of Pies and Cakes Ltd at 30 June 2018 was expected to be as follows:

The plans for the six months to 31 December 2018 can be summarised as:

(i) Production costs per unit will be:

(ii) Sales will be at a price of £20 per unit for the three months to 30 September and at £21 subsequently. The number of units sold will be:

All sales will be on credit, and debtors will pay their accounts one month after they bought the goods.
(iii) Production will be consistent at 450 units per month.
(iv) Purchases of direct materials – all on credit – will be:

Creditors for direct materials will be paid two months after purchase.
(v) Direct labour is paid in the same month as production occurs.
(vi) Variable indirect manufacturing expenses are paid in the month following that in which the units are produced.
(vii) Fixed indirect manufacturing expenses of £450 per month are paid each month and never in arrears.
(viii) A machine costing £2,500 will be bought and paid for in July. A motor vehicle costing £10,000 will be bought and paid for in September.
(ix) Loan notes of £25,000 will be issued and the cash received in November. Interest will not be charged until 2019.
(x) Provide for depreciation for the six months: Buildings £15,000; Motor vehicles £4,000; Office fixtures £220; Plant and machinery £5,000.
You are required to draw up as a minimum:
(a) Cash budget, showing figures each month.
(b) Accounts receivable budget, showing figures each month.
(c) Accounts payable budget, showing figures each month.
(d) Raw materials budget, showing figures each month.
(e) Forecast operating statement for the six months.
(f) Forecast statement of financial position as at 31 December 2018.
In addition, draw up any other budgets which show the workings behind the above budgets.