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Famous Company Ltd. plans for the 6 months ended June 30, 2021 as follows: An issue of 5,000 shares at GHS3 will be in May.

Famous Company Ltd. plans for the 6 months ended June 30, 2021 as follows:

  1. An issue of 5,000 shares at GHS3 will be in May.
  2. Cost of plant GHS9,000 will be bought and paid for in April.
  3. Creditors for raw materials bought are paid two months after purchase.
  4. Depreciation for the 6 months are: Plant GHS1,800; Automobiles GHS1,200.
  5. Fixed overhead is at GHS900 per month, payable one month in arrears.
  6. Normally, debtors pay their accounts three months after they have bought the goods.
  7. Production of 80 units per month, apart from January, when only 50 units will be produced.
  8. Variable overhead and Direct labour are paid in the same month as the units are produced.
  9. Sales are expected at a price of GHS90 per unit as follows:

Jan

Feb

Mar

Apr

May

Jun

Units

60

70

80

110

110

90

  1. Direct material purchases will be as follows:

Jan

Feb

Mar

Apr

May

Jun

GHS

900

1,200

1,500

1,800

2,400

1,920

  1. Unit production costs: GHS

Direct material 30

Direct labour 36

Variable overhead 15 81

  1. The following statement of financial position has also been provided:

FAMOUS COMPANY LTD.

STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2020

Cost

Depre- ciation

Net

NON-CURRENT ASSETS

GHS

GHS

GHS

Plant

18,000

6,000

12,000

Automobiles

12,000

2,400

9,600

13,000

8,400

21,600

CURRENT ASSETS

Inventories: Raw materials

Finished goods (175 units)

Debtors (Oct. GHS4,590)

(Nov. GHS1,620)

(Dec. GHS1,350)

Cash at Bank

4,500

14,175

7,560

5,400

31,635

Less CURRENT LIABILITIES

Trade creditors (Nov. GHS900; Dec. GHS720)

1,620

Expense creditors (Dec)

900

(2,520)

29,115

NET ASSETS EMPLOYED

50,715

FINANCED BY:

Share capital (10,000 shares at GHS3)

30,000

Profit and Loss Account

20,715

50,715

Required:

Compile the following budgets by months:

  1. Materials Budget
  2. Production Budget
  3. Production Cost Budget
  4. Trade Creditors Budget
  5. Trade Debtors Budget
  6. Cash Budget
  7. Forecast Income Statement for the six months ended June 30, 2021
  8. Projected Statement of Financial Position as at June 30, 2021

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