ABC Ltd. manufacturing company producing three types of products i.e. P, Q and R.

The current pattern of sales of three prod

as follows -
Products P Q R
Selling Price (₹) 200 260 420
Raw Material (Kg) 0.5 1.2 2.5
Direct Material (Kg) 0.25 - -
Skiiled Labour hours 4 6 8
Semi Skiiled Labour hours 2 2 3
Variable Overheads (₹) 40 80 80
Prices of raw materials and direct materials respectively, are ₹ 100 and ₹ 40 per kg. Wage rate of skilled and semi-skilled labou
hours a day for 25 days in a month. The position of inventory are as follows -
Particulars Raw Materials Direct Materials P Q R
Opening 600 400 400 100 50
Closing 650 260 200 300 50
The fixed overhead amounts to ₹ 2,00,000 per month. The company desires a profit of ₹ 1,20,000 per month. Prepare the follo
1. Sales budget in quantity and value
2. Production budget showing quantity to be manufactured.
3. Purchase budget showing the quantity and value.
4. Direct labour budget showing the number of workers and wages
rent pattern of sales of three products is in the ratio of 8:2:1 respectively. The relevant data are

te of skilled and semi-skilled labour, respectively, are ₹6 and ₹5. Each operator work 8

0,000 per month. Prepare the following for the month:

Information Given
Particulars P Q R
Selling Price (₹) 200 260 420
Raw Material (Kg) 0.5 1.2 2.5
Direct Material (Kg) 0.25 - -
Skiiled Labour hours 4 6 8
Semi Skiiled Labour hours 2 2 3
Variable Overheads (₹) 40 80 80

Sales Mix 8 2 1

Particulars Raw Materials Direct Materials P Q R

Opening 600 400 400 100 50
Closing 650 260 200 300 50

Part 2 Production Budget

Particulars P Q R Total
Mnf/Sales Qty 4391 1098 549
Add: Cl. St 200 300 50
Less: Op. St. 400 100 50
Budgeted Production 4191 1298 549 6038

Part 3 Raw Material Usage Budget

Particulars P Q R Total
Budgeted Production 4191 1298 549 6038
Raw Material Usage 0.5 1.2 2.5
Raw Material Required 2096 1558 1373 5026
Direct Material Usage 0.25 - -
Direct Material Required 1048 0 0 1048

Part 4 Purchase Budget Total Hrs

Particulars Raw Material Direct Material Total 200
Budgeted Usage/Required 5026 1048
Add: Cl. St. 650 260
Less: Op. St. 600 400
Budgeted Production 5076 908 5983
Price 100 40
Cost of Production 507564 36311 543875
 Part 1Sales Budget in Qty.
Particulars Price P Q
Selling Price 200 260
Variable Cost
Raw Material 100 50 120
Direct Material 40 10 0
Skilled Labour 6 24 36
Semi Skilled La 5 10 10
Variable Overheads 40 80
Total Variable Cost 134 246
Cpu 66 14
Sales Mix 8 2
Weighted Contribution 528 28

Fixed Cost 200000

Add: Desired Profit 120000
Desired Contrib 320000

Sales Budget in Qty

Sales Qty P Q R
No. od Batches 549 549 549
Sales Mix 8 2 1
Total Sales Qty 4391 1098 549

Sales Budget In Value

Particulars P Q R
Sales Qty 4391 1098 549
Price 200 260 420
Sales Volume 878216 285480 230580

Part 5 Direct Labour Budget

Particulars P Q R Total
Budgeted Production 4191 1298 549
Skilled Labour Hour 4 6 8
Skilled Labour Hour Required 16764 7788 4392
Skilled Workers Required 84 39 22
Cost of Direct(Skilled) Labour 100586 46728 26352 173666

Semi Skilled Labour Hour 2 2 3

Semi Skilled Labour Hour Requi 8382 2596 1647
Semi Skilled Workers Required 42 13 8
Cost of Semi Skilled LABOUR 41911 12980 8235 63126

Total Cost of Labour 142497 59708 34587 236792

R Total
420

250
0
48
15
80
393
27
1
27 583
Information Given
Selling Price (₹) 200 260 420
Raw Material (Kg) 0.5 1.2 2.5
Direct Material (Kg) 0.25 - -
Skiiled Labour hours 4 6 8
Semi Skiiled Labour hours 2 2 3
Variable Overheads (₹) 40 80 80
Sales Mix 8 2 1

Particulars Raw MaterialsDirect Materials P Q R

Opening 600 400 400 100 50
Closing 650 260 200 300 50

Add

Part 2 Production Budget

Particulars P Q R Total
Maf/Sales Qty. 4391 1098 549
Add: Cl St. 200 300 50
Less: Op. St. 400 100 50
Budgeted Production 4191 1298 549 6038

Part 3 Raw Material Usage Budget

Particulars P Q R Total
Budgeted Production 4191 1298 549 6038
Raw Material Usage 0.5 1.2 2.5
Raw Material Required 2096 1558 1373 5026
Direct Material usage 0.25 - -
Direct Material Required 1048 0 0 1048

Part 4 Purchase Budget

Particulars Raw Material Direct Material Total
Budget Usage 5026 1048
Add: Cl. St. 650 260
Less: Op. St. 600 400
Budgeted Purchase 5076 908
Price 100 40
Cost of Purchase 507600 36320 543920

Part 5 Direct Labour Budget

Particulars P Q R Total
Budgeted Production 4191 1298 549 6038 200
Skilled Labour Hour 4 6 8
Skilled Labour Hour Required 16764 7788 4392
Skilled workers Required 84 39 22 145
Cost of Direct Labour Hour 100586 46728 26352 173666
(

Semi skilled Labour hour requ 2 2 3

Semi Skilled Labour hour req 8382 2596 1098 12076
Skilled Skilled Workers requi 42 13 5 60
Cost of Semi Skilled Labour 41911 12980 5490 60381

Total Labour Cost 142497 59708 31842 234047

Part1 Sales Budget in Quantity

Particulars Prices P Q R Total

Selling Price 200 260 420
Variable Cost
Raw Material 100 50 120 250
Direct Material 40 10 0 0
Skilled Labour 6 24 36 48
Semi Skilled Labour 5 10 10 15
Variable Overheads 40 80 80
Total VC 134 246 393
Cpu 66 14 27
Sales Mix 8 2 1
Weighted Contribution 528 28 27 583

FC 200000
desired Profit 120000
Desired Contribution 320000

Sales Quantity P Q R
No. of Batches(549) 549 549 549
Sales mix 8 2 1
Total Sales Q 4391 1098 549

Sales Budget in Value

Particulars P Q R
Q 4391 1098 549
PRICE 200 260 420
878216 285480 230580
The following data relates to ABC Ltd.
The financial manager has made the following sales forecast for the first 5 months of the coming year, commencing from 1 Ap
Month Sales (₹)
April 40,000
May 45,000
June 55,000
July 60,000
August 50,000
Other data
1. Debtor's and creditor's balance at the beginning of the year are ₹ 30,000 and ₹ 14,000 respectively. The balance of o
(a) Cash Balance ₹ 7,500
(b) Stock ₹ 51,000
© Accrued sales commission ₹ 3,500
2. 40% sales are on cash basis. Credit sales are collected in the month following the sale.
3. Cost of sales is 60% of sales.
4. The only other variable cost is 5% commission to sales agents. The sales commission is paid in a month after it is earned.
5. Inventory is kept equal to sales requirements for the next 2 months budgted sales.
6. Trade creditors are paid in the following month after purchases.
7. Fixed
You costs are to
are required ₹ 5,000 peramonth
prepare including
cash budget ₹ 2,000
for the depreciation.
month of April, May and June 2023 respectively. Also show Sales, Creditors,
Total Receipts and Total Payment information graphically.
g year, commencing from 1 April 2023

respectively. The balance of other relevant assets and liabilities are

a month after it is earned.

ely. Also show Sales, Creditors,

 Flexible Budget For the year 2023
Particulars
 Flexible Budget for the year ended 31st March 2024
Particulars 80% 70%
Variable Cost
Direct Labour 18000 15750
Material Cost 6000 5250
TVC 24000 21000 50%
Semi Variable Cost 60%
Power(F) 12000 12000 70%
Power(V) 28000 24500 80%
Repairs(F) 4800 4800 90%
Repairs(V) 1200 1050
TSVC 46000 42350
Fixed Overheads
Depreciation 11000 11000
Insurance 5000 5000
Salaries 10000 10000
TFC 26000 26000
Total Cost 96000 89350
 Solution of Cash Budget Problem
Opening Debtor 30000
Opening Creditors 14000
Opening Cash Balance 7500
Opening Stock Balance 51000
Accrued Sales Commission 3500

Working Notes
Particulars April May June July August
Sales 40000 45000 55000 60000 50000
Credit Sales(60% of sales) 24000 27000 33000 36000 30000

Creditors Calculation
Cost of Sales(Credit Sales) 24000 27000 33000 36000 30000
Desired Closing Inventories(next 2 60000 69000 66000
Opening Inventory 51000 60000 69000
Purchases(cost+cl-Op) 33000 36000 30000 Paym
Pyment to creditors 14000 33000 36000

45000

Payment
40000
Creditors Graph 35000
30000
40000 25000
3500
35000 20000 3000
30000 15000
Creditors

25000 10000 14000

33000 36000
20000 5000
15000 0
14000 1
Creditors Fixed Cost(5-2)
10000 Ax
5000
0
April May June
Months
 Cash Budget
Particulars April May June July August
Op. Bal. 7500 33000 37000 S
A. Receipts
Cash Sales(40%of Sales) 16000 18000 22000 24000 20000
60000
Cash Received from Debtors 30000 24000 27000 33000 36000

Cas/ Credit Sales

50000
Total Receipts 53500 75000 86000
40000 16000
B. Payments 30000
Creditors 14000 33000 36000 20000 24000
Fixed Cost(5-2) 3000 3000 3000 10000
Comm to Agent(5% of prv month) 3500 2000 2250 0
April
Total Payment 20500 38000 41250
Cosing Balance(R-P) 33000 37000 44750

Credit Sales(60% o

Payment Graph
Receip

Cash Sales& Debtors receipts

50000

45000 40000
2250 30000
Payment

2000 3000
40000 3000 30000
35000 20000
30000 16000
10000
25000
3500 36000 0
20000 3000 33000
April
15000
10000 14000

5000
Cash Sales(40%of Sales)
0
1
Creditors Fixed Cost(5-2) 2 3 prv month)
Comm to Agent(5% of
Axis Title
 Sales Graph

60000
50000 22000
18000
40000 16000
30000
33000
20000 24000 27000
10000
0
April May June
Months

Credit Sales(60% of sales) Cash Sales(40%of Sales)

Receipts Graph

0 27000
30000 24000
0

0
18000 22000
16000
0

0
April May June
Months

Cash Sales(40%of Sales) Cash Received from Debtors

 Information Given
Selling Price (₹) 200 260 420
Raw Material (Kg) 0.5 1.2 2.5
Direct Material (Kg) 0.25 - -
Skiiled Labour hours 4 6 8
Semi Skiiled Labour hours 2 2 3
Variable Overheads (₹) 40 80 80
Sales Mix 8 2 1

Particulars Raw Materials Direct Materials P Q

Opening 600 400 400 100
Closing 650 260 200 300

Part 2 Production Budget

Particulars P Q
Mnf/ Sales Qty. 4391 1098
Add: Cosing Stock 200 300
Less: Op. Stock 400 100
Budgeted Production 4191 1298

Part 3 Raw Material Usage Budget

Particulars P Q R
Budgeted Production 4191 1298 549
Raw Material Usage 0.5 1.2 2.5
Raw Material Required 2096 1558 1373
Direct Material Usage 0.25 - -
Direct Material Required 1048 0 0

part 4 Purchase Budget

Particulars Raw Material Direct Material Total
Budgeted Usage 5026 1048
Add: Clo. Stock 650 260
Less: Op. Stock 600 400
Budgeted Purchase 5076 908
Price 100 40
Cost Of Purchase 507564 36311 543875

Part 5 Direct Labour Budget

Particulars P Q R
Budgeted Production 4191 1298 549
Skilled Labour Hour 4 6 8
Skilled Labour Hour Required 16764 7788 4392
Skilled Workers Required 84 39 22
Cost of Skilled Labour 100586 46728 26352

Semi Skilled Hour 2 2 3

Semi Skilled Hour Required 8382 2596 1647
Semi Skilled workers Required 42 13 8
Cost Of Semi Skilled Labour 41911 12980 8235

Total Labour Cost 142497 59708 34587

 Part 1. Sales Budget inQuantity

Particulars Prices P Q R
Total
Selling Price 200 260 420
Variable Cost
Raw Material 100 50 120 250
Direct Material 40 10 0 0
Skilled Labour 6 24 36 48
R Semi Skilled Labour 5 10 10 15
50 Variable Overheads 40 80 80
50 TVC 134 246 393
Cpu 66 14 27
Sales Mix 8 2 1
Weighted Contributi 528 28 27 583
R Total
549
50 FC 200000
50 ADD: Desired PROFIT 120000
549 6038 Desired Contribution 320000

Sales Budget in Qty.

Total Particulrs P Q R
No. of Batches Req. 549 549 549
Sales Mix 8 2 1
5026 Sales Quantity 4391 1098 549

1048 Sales Budget in Value

Particulars P Q R
Sales Qty. 4391 1098 549
Price 200 260 420
Sales in Value 878216 285480 230580

Total TWH 200

173666
 63126

236792
 Flexible Budget for the year ended 2023
Particulars 140% 80%
Variable Cost
Direct Labour 31500 18000 60%
Material Cost 10500 6000 70%
Total Variable Cost 42000 24000 80%
Semi Variable Cost 90%
Power(F) 12000 12000 100%
Power(V) 49000 28000 110%
Repairs(F) 4800 4800 120%
Repairs(V) 2100 1200 130%
Total Semi Variable C 67900 46000 140%
Fixed Cost 150%
Depreciation 11000 11000
Insurance 5000 5000
Salaries 10000 10000
Total Fixed Overhead 26000 26000
Total Cost 135900 96000
 Information Given
Opening Debtors 30000
Opening Creditors 14000
Opening Cash Balance 7500
Opening Stock Balance 51000
Accrued Sales Commission 3500

Working Notes
Particulars April May June July August
Sales 40000 45000 55000 60000 50000
Credit Sales(60%) 24000 27000 33000 36000 30000

Calculation of creditors
Particulars April May June July August
Credit sales(cost of sales) 24000 27000 33000 36000 30000
Closing stock 60000 69000 66000
Opening stock 51000 60000 69000
Purchases(sales+cl-op) 33000 36000 30000
payment to creditors 14000 33000 36000
 Cash Budget(April, May and June)
Particulars April May June July
Opening balance 7500 33000 37000
A. Receipts
Cash Sales(40%) 16000 18000 22000 24000
Cash Received from Debtors 30000 24000 27000 33000
Total Receipts 53500 75000 86000

B. Payments
Creditors 14000 33000 36000
Fixed Expenses 3000 3000 3000
Commission to sales agent(5%) 3500 2000 2250
Total payment 20500 38000 41250
Closing Balance 33000 37000 44750
August

20000
36000
 Information Given
Opening Debtors 30000
Opening Creditors 14000
Opening Cash Balance 7500
Accrued sales commission 3500
Opening stock balance 51000

Working Notes
Particulars April May June July August
Sales 40000 45000 55000 60000 50000
Credit Sales(60%) 24000 27000 33000 36000 30000
Cash Sales(40%) 16000 18000 22000 24000 20000

Calculation of Payment made to creditors

Cost of sales(60%) 24000 27000 33000 36000 30000
Add: Closing Stock 60000 69000 66000
Less: Opening Stock 51000 60000 69000
Purchases(cost+cl-op) 33000 36000 30000
Payment made to creditors 14000 33000 36000
 Cash Budget for the month of April, May and June
Particulars April May June July August
Opening Balance 7500 33000 37000
A. Receipts
Cash Sales 16000 18000 22000 24000 20000
Cash received from Debtors 30000 24000 27000 33000 36000
Total Receipts 53500 75000 86000

B. Payments
Payment to Creditors 14000 33000 36000
Fixed Expenses 3000 3000 3000
Accrued Commission 3500 2000 2250
Total Payment 20500 38000 41250
Closing Balance of cash 33000 37000 44750
First Topic Budgeting
Functional Budget Flexible Budget
1 Production Budget Simple Problem with 2 Capacities
2 Sales Budget
3 Material Purchase Budget
4 Cash Budget

2nd Topic CVP

1 CVP Chart with Original Data or Cost Indiffernece point
2 New BEP changes with any of the factor
3 P/V Ratio, Targeted Profit, BEP, MOS
(Goel seek)

3rd Topic Decision Making

1 Pricing Decision
2 Export order deMake or Buy
3 Product Mix