48.000 4.000 62,000 30,000 44.000 49.000 62.000 Illustration 2 : Prepare a Profit Budget and a Cash Budget for the 1" Quarter April - June 2004 for KG Industrial Ltd. From the following information: a. The company produces two products and their unit sale prices and material contents are as under :- Sale Price Material Content Product A Rs.75.000 Rs.25.000 60% of sale price 50% of sale price Product B (In addition Excise duty and sales tax as per item (f) below is recovered) b. The production target has been fixed as under j27 Month Product A Product B April 50 Nos. 50 Nos. May 60 Nos. 60 Nos. June 70 Nos. 60 Nos. Production for January, February and March 2004 was at 80% level of April 2004 production. c. The monthly expenses are as under: i. Salaries & Wages Rs. 7.50,000 payable in the following month. ii. Variable overheads - 5% of sale value payable in the following month. iii. Fixed overheads 2,00,000 payable 50% in the curr onth and 50% 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 @ 15% and Sales Tax @ 2% on sales payable to the authorities in the following month. 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 @ 17% which is charged every quarter that is, June, September, December and March. The Company carries its banking operation presently through a Current Account