(a) What is meant by the terms:

(i) Budget

(ii) Operating budget

(iii) Master budget?

(b) The information below relates to the business of Madingley Ltd:
Statement of Financial Position as at 30 May 2013 ( $£ 000$ )
\begin{tabular}{|c|c|c|c|}
\hline Non-current assets & & \begin{tabular}{l}
Aggregate \\
denreciation \end{tabular} & \begin{tabular}{l}
Book \\
value \end{tabular} \\
\hline \begin{tabular}{l}
Non-current assets \\
Land and buildings \end{tabular} & \begin{tabular}{c}
Cost \\
134.00 \end{tabular} & & \begin{tabular}{l}
value \\
134.00 \end{tabular} \\
\hline Plant and machinery & 9.40 & 3.76 & 5.64 \\
\hline Fixtures and fittings & $\frac{2.30}{145.70}$ & $\frac{1.05}{4.81}$ & $\frac{1.25}{140.89}$ \\
\hline Current assets & & & \\
\hline \begin{tabular}{l}
Inventory: Raw materials \\
Finished goods \end{tabular} & & 91.70

& \\

\hline \begin{tabular}{l}

Finished goods \\

Accounts receivable

\end{tabular} & & \begin{tabular}{l}

142.40 \\

501

\end{tabular} & \\

\hline \begin{tabular}{l}

Accounts receivable \\

Bank

\end{tabular} & & \begin{tabular}{r}

394.40 \\12.40

\\

\end{tabular} & $\frac{840.90}{981.79}$ \\

\hline Less Current liabilities & & & \\

\hline \begin{tabular}{c}

Accounts payable: Raw materials \\

Overheads

\end{tabular} & &82.20

& \\

\hline Overheads & & 127.40 & $\frac{(209.60)}{772.19}$ \\

\hline \begin{tabular}{l}

Net assets \\

Equity

\end{tabular} & & & \\

\hline \begin{tabular}{l}

Share capital \\

Retained profits

\end{tabular} & & \begin{tabular}{l}

500.00 \\

272.19 \\

\end{tabular} & \\

\hline & & & $\underline{\underline{772.19}}$ \\

\hline

\end{tabular}

The following is a schedule of the budgeted income and expenditure for the six months ended 30 November 2013 ( $\mathbf{£} 000$ ):

\begin{tabular}{lcccc}

& Sales & Materials & Wages & Overheads \\

June & 193.20 &41.20

& 7.60 & 123.00 \\

July & 201.40 &42.40

& 7.90 & 119.20 \\

August & 216.10 &49.60

& 8.80 & 131.40 \\

September & 200.50 &31.40

& 6.10 &91.50

\\

October & 190.30 &21.20

& 3.70 &59.30

\\

November & 183.70 &19.80

& 2.60 & 42.60

\end{tabular}

Notes:

(i) Generally, materials are paid for two months after receipt, and customers pay on average after three months.

(ii) Payments outstanding for materials at 1 June 2013 were: April $£ 38,500$; May $£ 43,700$.

(iii) Accounts receivable were: March $£ 194,300$; April $£ 203,600$; May $£ 196,500$.

(iv) Wages are to be paid in the month in which they fall due.

(v) Overheads are to be paid one month after they are incurred: the figure for May was $£ 127,400$.

(vi) Inventory of raw materials are to be kept at $£ 91,700$.

(vii) The inventory of finished goods at 30 November 2013 are to be $£ 136,200$.

(viii) There is no inventory of semi-finished items on 31 May 2013, and none are expected in inventory on 30 November.

(ix) $40 \%$ of the overheads are to be considered as fixed.

(x) Depreciation on plant and machinery is to be allowed at $10 \%$ per annum on cost; the fixtures and fittings are thought to have a value at 30 November of $£ 980$.

(xi) There are no sales of finished goods or purchases of raw materials for cash planned during the period.

\section*{Prepare:}

(a) A forecast operating statement for the period June to November 2013; and

(b) A forecast statement of financial position as at 30 November 2013.