Cash Budget Summerised below are the Income and Expenditure forecast of Gemini Ltd. For the month of March to August 2008 Month Sales Purchase Wages M.Exp. Off. Exp. S.Exp. March 60,000 36,000 9,000 4,000 2,000 4,000 April 62,000 38,000 8,000 3,000 1,500 5,000 May 64,000 33,000 10,000 4,500 2,500 4,500 June 58,000 35,000 8,500 3,500 2,000 3,500 July 56,000 39,000 9,500 4,000 1,000 4,500 August 60,000 34,000 8,000 3,000 1,500 4,500 You are the given the following further information:

Cash Budget a)Plant costing Rs.16,000 is due for delivery in July payable 10% on delivery and the balance after three months b)Advance Tax of Rs.8,000 is payable in March and June each c)Period of credit allowed (i) to suppliers 2 months and (ii) to customer 1 month. d)Lag in payment of manufacturing expenses ½ month e)Lag in payment of all other expenses 1 month. You are required to prepare a cash budget for three months starting on Ist may 2008 when there was a cash balance of Rs.8,000

Cash Budget - Solution MayJuneJuly Receipts: Op. Balance8,00015,75012,750 Debtors 62,000 64,000 58, Total 70,00079,75070, Payments: Creditors 36,00038,00033,000 Wages 8,000 10,000 8,500 M.Exp.3,750 4,000 3,750 off. Exp. 1,500 2,500 2,000 S. Exp. 5,000 4,500 3,500 Advance Tax -- 8,

Cash Budget - Solution May June July Delivery of plant ,600 (10% at the time of Delivery) Total 54,250 67,000 52, Closing Balance 15,750 12,750 18,400

Flexible Budget A Factory is currently working at 50% capacity and produces 10,000 Units at a cost of Rs.180 Per unit as per details below: Rs. Materials 100 Labour 30 Factory Overhead 30 (Rs.12 Fixed) Administrative Overhead 20 (Rs.10 Fixed) Total Rs.180