Prepare a profit and cash budget for the first quarter, April–June, for A.B. Industries Ltd from the following information for the coming year:

a. The company produces two products, and their unit sales prices and material contents are as follows:

Sales price Material content Product A Rs 75,000 60% of sales price Product B Rs 25,000 60% of sales price

b. The production target has been fixed as follows:

Product A (units) Product B (units)

April 50 50 May 60 60 June 70 50 Production for January, February and March was at 80% of the level of April’s production.

c. The monthly expenses are as follows:

i. Salaries and wages comprise Rs 7,50,000, which is payable in the following month.

ii. Variable overheads comprise 5% of sales value, which is payable in the following month.

iii. Fixed overheads comprise Rs 2,00,000, of which 50% is payable in the current month and 50% is payable in the following month.

d. Payment for material is made in the third month from the month of procurement.

e. The company maintains a constant level of inventory. No stock of finished goods is kept and the entire production is invoiced the same month. The company gives 30 days’ credit to its customers

f. Company’s products attract excise duty at 15%. Sales tax at 2% is payable to the authorities in the following month. These are to be borne by the buyer. The selling price of products is exclusive of these levies.

g. The company enjoys a cash credit facility from its banker to the extent of Rs 35,00,000, which is fully drawn. The interest payable is at 17%, which is charged every quarter, that is, June, September, December and March. Presently, the company carries its banking operations through a current account.