Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION Pr QUESTION Price and Cost (Pvt) Ltd Company makes a single product, whose unit budget details are as follows: BWP BWP Selling price 30

QUESTION Pr

QUESTION Price and Cost (Pvt) Ltd Company makes a single product, whose unit budget details are as follows: BWP BWP Selling price 30 Less costs: Direct material 9 Direct labour 4 Direct production expenses 6 Variable selling expenses 4 Additional information: 1. Unit sales are expected to be:

June July August September October 1 000 800 400 600 900 2. Credit sales will account for 60% of total sales. Debtors are expected to pay in the month following sale for which there will be a cash discount of 2%. 3. Inventory levels will be arranged so that production in one month will be meet the next months sales demand. 4. The purchases of direct materials in one month will just meet the next months production requirements. 5. Suppliers of direct materials will be paid in the month following purchase. 6. Labour cost will be paid in the month in which they are incurred. All other expenses will be paid in the month following that in which they are incurred. 7. Fixed expenses are P2 000 per month and include P180 for depreciation. 8. The bank balance at 1 July 2017 is P3 900 favourable to the business. Required: Prepare a cash budget for Price and Cost (Pvt) Ltd Company for the three months period ending 30 September 2017 showing the balance of cash at the end of each month. (20 marks)

ice and Cost (Pvt) Ltd Company makes a single product, whose unit budget details are as follows: BWP BWP Selling price 30 Less costs: Direct material 9 Direct labour 4 Direct production expenses 6 Variable selling expenses 4 Additional information: 1. Unit sales are expected to be: June July August September October 1 000 800 400 600 900 2. Credit sales will account for 60% of total sales. Debtors are expected to pay in the month following sale for which there will be a cash discount of 2%. 3. Inventory levels will be arranged so that production in one month will be meet the next months sales demand. 4. The purchases of direct materials in one month will just meet the next months production requirements. 5. Suppliers of direct materials will be paid in the month following purchase. 6. Labour cost will be paid in the month in which they are incurred. All other expenses will be paid in the month following that in which they are incurred. 7. Fixed expenses are P2 000 per month and include P180 for depreciation. 8. The bank balance at 1 July 2017 is P3 900 favourable to the business. Required: Prepare a cash budget for Price and Cost (Pvt) Ltd Company for the three months period ending 30 September 2017 showing the balance of cash at the end of each month. (20 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Chains Of Finance How Investment Management Is Shaped

Authors: Diane-Laure Arjalies, Philip Grant, Iain Hardie, Donald MacKenzie, Ekaterina Svetlova

1st Edition

0198802943, 978-0198802945

More Books

Students also viewed these Finance questions