Question No:-1

A Company wants to prepare cash budget based on the following information. Forecast the cash

position for the months of October, November and December. Complete company's estimate.

August

Sales = Rs.440000

Purchases = Rs.168000

Salaries = Rs.20000

Other expenses = Rs.11000

September

Sales = Rs.260000

Purchases = Rs.520000

Salaries = Rs.74000

Other expenses = Rs.16000

October

Sales = Rs.160000

Purchases = Rs.304000

Salaries = Rs.56000

Other expenses = Rs.12000

November

Sales = Rs.232000

Purchases = Rs.412000

Salaries = Rs.50000

Other expenses = Rs.24000

December

Sales = Rs.172000

Purchases = Rs.320000

Salaries = Rs. 56000

Other expenses = Rs.12000

Additional Information:

Sales: 40% realized in the month of sales, discount on sales 3% in the same month. Balance

realized equally in two subsequent months by calculating on gross sales.

Accounts receivable consists of Rs. 100000, company receives 60% in October, and balance

received equally in last two months.

Company paid against Purchases in the month following the month of purchases.

30% of the salaries paid in the month of occurrence and remaining is paid in following month.

Other expenses paid in the month of occurrence.

Rent: Rs 1,000 per month paid quarterly in advance in current year during the month of

December.

Income-tax; Installment of advance tax of next year Rs 35,000 due on 15th December.

Cash in hand: Rs 5,000 on September 30.

Company arranges financing in case of deficit, if deficit is below Rs. 200000, company takes

loan from bank, if more than Rs. 200000, company issues shares.

Loan installment is due during November at Rs. 8000.

QUESTION No:2

A Chemical manufacturing company has budgeted capacity of 10000 direct labor hours per

month that is used to calculate predetermined factory overhead rate. At this capacity, company'

budgeted fixed factory overhead is Rs. 75000 with variable overhead rate at Rs. 5 per labor hour.

During the month, labor worked for 12000 hours. However, company uses standard cost system

and labor work for 3 hours to produce one unit when company operates at standard. Company

produces 3000 units during the month. Company's actual factory overheads are Rs. 230000.

Required: Calculate two factory overhead and three factory overhead variances.