ABC Ltd is to car

production level of 800 units per week and also includes depreciation of Rs 40,000 per week. This cost will remain unchanged during next two weeks (weeks 1 and 2); however, during modernisation period fixed overheads will be reduced by Rs 40,000 per week. . In addition to the above unit costs, overtime premiums of Rs 50,000 per week will be incurred in weeks 1 and 2. . During the modernization, all variable costs will be avoided, except for direct labour, which will be incurred at the level equivalent to 800 units of production per week. . All payments are made in the week in which the liability is incurred. i. Liquidity: The company has a bank overdraft (loan) balance of Rs 3,90,000 at the beginning of week 1. The company has an arrangement with the bank for overdraft with a maximum limit of Rs 5,00, 000. The company is anxious to establish the liquidity situation over the modemization period, excluding the requirements for finance for the modernization itself. Required: a. Prepare a weekly cash budget covering the six-week period up to the planned completion of the modernization. (15 marks) b. Will the company able to manage with a maximum overdraft limit of Rs 5,00,000? Comment briefly on any matters concerning the liquidity situation that you feel should be drawn to the attention of management. (5 marks) motti . Rahul | Support & +1-6 Dropbox promotion Type here to search O HI f1 f2 f3 D f4 f5 16 $7 a # $ % 2 3 & 4 5 6 W TSection 1 of 1 MANACET ~ v. Costs: