Factory expenses-variable @ 20 per unit 40,000 30,000 50,000 *60% in same month 24,000 18,000 30,000 *40% in next month 16,000 12,000 Administrative overheads 5000 p.m. * 60% in same month 3,000 3,000 3,000 * 40% in next month 2,000 2,000 Illustration 7 : Asha Limited is incorporated to take over running business of Nish and Co. from 1st January, 2000. The tangible assets of Nisha and co. comprises Premises Rs. 25,000; Plant Rs. 10,000 Equipment Rs. 5,000 and Stock Rs. 6,000. The consideration is settled by issue of 5,000 Equity shares of Rs. 10/- each par. 32 j32 In addition, to provide working capital for initial period of operations, it issued for cash consideration 500 Equity Shares of Rs. 10 each and 12% Debentures of same face value. The above transaction were completed in January, 2000. a. The expected Sales for January are Rs.16,000. Therefore it is expected to increase @ 25% over sales of previous month for February and March thereafter @ 20% of sale of preceding month till June 2000. b. The cost of goods sold is @ 60% of sales. c. The 20% of sales and purchases are for cash and rest on credit of one month. d. Preliminary expenses will be Rs.10,000 payable 50% in February and balance in April. e. Stock level is to remain unchanged. f. Administration expenses will be Rs. 3,000 for first one month and Rs.5,000 thereafter of these 50% is payable in same month and balance in the following month. g. Selling expenses expected @10% of sales payable two months after sales. Prepare cash budget for January to June 2000