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Questions On Budgets SPPU MBA Sem 1

This document provides sample practice problems for preparing flexible budgets and cash budgets. It includes 6 practice problems covering topics like: 1. Preparing flexible budgets for different production levels and calculating variable and fixed expenses. 2. Preparing a cash budget using data on sales, purchases, wages, payments and receipts to determine the required bank overdraft facilities. 3. Preparing production and purchase budgets to determine raw material requirements and purchases using data on unit requirements, sales forecasts and opening/closing inventory levels. The problems provide data and ask the reader to calculate and present the budgets. Solutions are not shown to allow the reader to practice the problems. Referencing a textbook is suggested for learning the concepts and

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Ketan Ingale
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643 views7 pages

Questions On Budgets SPPU MBA Sem 1

This document provides sample practice problems for preparing flexible budgets and cash budgets. It includes 6 practice problems covering topics like: 1. Preparing flexible budgets for different production levels and calculating variable and fixed expenses. 2. Preparing a cash budget using data on sales, purchases, wages, payments and receipts to determine the required bank overdraft facilities. 3. Preparing production and purchase budgets to determine raw material requirements and purchases using data on unit requirements, sales forecasts and opening/closing inventory levels. The problems provide data and ask the reader to calculate and present the budgets. Solutions are not shown to allow the reader to practice the problems. Referencing a textbook is suggested for learning the concepts and

Uploaded by

Ketan Ingale
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Budgetary Control

Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

1. The expenses budgeted for production of 10,000 units in a factory are


furnished below :
Rs. Per unit
Material 70
Labour 25
Variable overheads 20
Fixed overheads
(Rs.1,00,000) 10
Variable expenses
(direct) 5
Selling expenses
(10% fixed) 13
Distribution expenses
(20% fixed) 7
Administration expenses
(Rs.50,000) 5
Total 155
Prepare a budget for the production of (a) 8,000 units, and (b) 6,000 units.
Assume that administration expenses are rigid for all levels of production.
Flexible Budget for the period
Solution

Particulars Rs/unit
Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

2. From the following details prepare a flexible budget at 90% and 100 % capacity
level

. Budget at 80% capacity level i.e. 8000 units


Particulars Rs
Material 16000 Variable
Labour 24000 Variable
Manufacturing exp 1600 Variable
office expenses 2500 Fixed
Depreciation 2800 Fixed
salesman charges 8000 Variable

Solution

Particulars
Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

3. The expenses budgeted for a production of 10,000 units in a factory are furnished
below:

Particulars Per unit (Rs)


Materials 80
Labour 20
Variable direct expenses 03
Fixed 10
overheads(Rs.1,00,000)fixed
Variable overheads 15
Selling overheads(10% fixed) 13
Distribution expenses (20%fixed) 07
Administration expenses(Rs 05
50,000) fixed
Total 153

Prepare a budget for a production of 6,000 units

Particulars
Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

4. From the following information prepare cash budget for the months of January,
February and March
December Rs January Rs February Rs march Rs
opening cash balance Rs 10000

Sales 245000 140000 245000 200000


dividend received 25000
rent paid 15000 15000 15000
electricity charges 1000 1000 1000
interest paid 15000
Purchases 15000 15000 12000

Machinery costing Rs 12,00,000 was purchases in January . Cash down was paid in January Rs
10000.
the first instalment was paid in march 25000
Sales amounts are received in the month after the month of sales.

Solution

Cash Budget January Rs February Rs march Rs


Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

5. ABC Co. wished to arrange overdraft facilities with its bankers during the period
April 2004 to June 2004 when it will be manufacturing mostly for the stock. Prepare a
Cash Budget for the above period from the following data, indicating the extent of the
bank facilities the company will require at the end of each month.
Particulars Sales Purchases Wages
February 2004 Rs.1, 80,000 Rs.1, 24,800 Rs.12, 000
March 1, 92,000 1, 44,000 14, 000
April 1, 08,000 2, 43,000 11, 000
May 1, 74,000 2, 46,000 10, 000
June 1, 26,000 2, 68,000 15, 000

Additional Information:
1. 50% of the credit sales are realized in the month following the sales
and remaining 50% in the second month following. Creditors are
paid in the month following the month of purchases. There are no
cash sales or cash purchases
2. Wages are paid in the month following the month of wages
3. Cash at bank estimated on 1st April 2004 is Rs.25, 000

Cash Budget April Rs May Rs June Rs


Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

6. Prepare Production and Purchase Budget From the


Following Details
units units
Particulars Product A Product B
Sales 150000 160000
Closing balance 25000 15000
Opening balance 10000 10000

Raw Materials X Y
Closing balance 20000 15000
Opening balance 10000 5000

1 unit of A requires 2
1 unit of B requires 3

Solution
Production Budget
Particulars Product A Product B
Sales
Add:Closing balance

Less:Opening balance
Production

Raw material required for the above production

X
Y

Raw Material Purchase Budget

Particulars X Y
Raw Material Required
Add: Closing Balance

Less: Opening Balance


Raw Material Purchase
Budgetary Control
Practice Problems: Please note this is not a question bank. These problems are only for practice.
Refer to a reference book

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