18/7/20

Budget Receipts Payments

Kinds of budget Approximation of costs & expenses
Responsibility Accounting Estimation of
Zero-Budgeting Inflows and Outflows
Parameters
Kinds
Sales
Cash Collection
Purchases
Material Feb
Direct Labour
Manufacturing O/H
Mar

The items
must be
bought

Payments
to be
made in
the next
month

Question 1: The ABC Co. manufactures bulbs. It sells bulbs for Rs.40 each. The sales are received in the follo
in the month following sales and the remaining 10% in the second month following sales. The fo
year 2016 a d the first quarter of the year 2017:
Month

Sales
Units

Required: 1.Prepare the following budgets for the first quarter 2017:
Sales Budget
Cash Collection Budget

2. calculate the amount receivable on March 31, 2017 Sales Bu

Month
Sales
Units
 * Rs.40

Total
expected
sales in
Rupees

Cash Collection Budget.

Cas

Months

November sales: 760,000 * 10%

December sales: 880,000 * 20% & 10%
January sales: 2,680,000 * 70%, 20% & 10%
February sales: 2,200,000 * 70% & 20%
Mrch sales sales: 1,800,000 * 70%

TOTAL

1st MT
100 15
15

Question 2 The ABC Co. manufactures bulbs. It sells bulbs for Rs.50 each. The sales are received in the follo
15% in the month following sales and the remaining in the second month following sales. The fo

2016
Month Oct Nov

Sales
Units 23,000 19,000

Required: 1.Prepare the following budgets for the first quarter 2017:
Sales & Cash Collection.

2. Prepare a partial balance sheet as on March 31, 2017, showing the net receivables.

Thursday 23, 2020 Production Budget

The ABC Co. manufactures bulbs. It sells bulbs for Rs.40 each. The sales are received in the following pattern; 70% are received
in the month following sales and the remaining 10% in the second month following sales. The following is its sales for last qua
year 2016 a d the first quarter of the year 2017. It is estimated that there must be atleast 10 percent of the budgeted units of
Five pounds of raw materials are required to complete one unit of product. It is planned that thefirm will have an ending inven
The firm had 20,000 pounds of material on hand in December 2016.
The raw material costs Rs.0.70 per pound.The purchases are paid in the ollowing pattern: 60% paid in the month of purchase,
the firm's had Rs.60,000 in its accounts payable against material purchases.
2016

Month Oct Nov Dec

Sales Units 23,000 19,000 22,000

Required: 1. Prepare a production budget for the first quarter of 2017.

2. Prepare a Direct material budget for the first quarter of 2017.
3. Prepare a purchases budget for the 1st quarter 2017.

ABC Co.
Production Budget
1st Quarter 2017
Jan
Budgeted units 67,000
Add: desired ending inventory 5,500
Total Needs 72,500
Less: Beginning inventory 6,700
Actual / required Needs in units 65,800

ABC Co.
Material Budget
1st Quarter 2017
Jan
Required production (Units) 65,800
Raw material needed per unit *5
Production needs in pounds 329,000
Add: desired ending inventory 27,000
Total needs 356,000
Less: beginning inventory 32,900
Raw material to be purchased 323,100

ABC Co.
Purchases Budget
1st Quarter 2017

Jan
Cost of materials to be purchased at Rs.0.70 per pound 226,170

Accounts Payable, beginning 60,000

1st month purchases_(226,170 *60%, 40%) 135702
2nd month purschases _ (185,990 * 60% & 40%)
3rd month purchases_

Total cash disdursements 195,702

 BUDGETING

Receipts Payments
10,000 9,000
Inflows Outflow

Government

9 bn 10 bn
1 bn

STATIONERY BUSINESS

Apr May Jun Jul Aug Sep Dec

peak season

Must start
manufacturing Must start Must have the ite Peak sales
Manufacturing readily available

Payments continue to Sales (cash or Sales still Sales still

be paid by Jun credit) receiving receiving

ales are received in the following pattern; 70% are received in the month of sales, 20%
month following sales. The following is its sales for last quarter of the
2016 2017
Oct Nov Dec Jan Feb Mar

23,000 19,000 22,000 67,000 55,000 45,000

ABC Co.

Sales Budget, First Quarter 2017

Jan Feb Mar

67,000 55,000 45,000

 40 40 40

2,680,000 2,200,000 1,800,000

ABC Co.
Cash Collection Budget
1st Quarter 2017

Jan Feb Mar TOTAL The ABC Co.

Balance Sheet _ Partial
76,000 __ ___ 76,000 As on March 31, 2017
176,000 8,800 ___ 184,800 Accounts Receivable
1,876,000 536,000 268,000 2,680,000 February sales: 2,200,000 * 10:
____ 1,540,000 440,000 1,980,000 March sales: 1,800,000 * 20% & 10%
____ ____ 1,260,000 1,260,000 Net receivable

2,128,000 2,084,800 1,968,000 6,180,800

1-Apr-17

2nd MT Final Sessional

15 40 30 100
15

ales are received in the following pattern; 65% are received in the month of sales,
month following sales. The following is its sales for last quarter of the

2017
Dec Jan Feb Mar

22,000 67,000 55,000 45,000

he net receivables.

ing pattern; 70% are received in the month of sales, 20%

lowing is its sales for last quarter of the
 ent of the budgeted units of the next month at the end of each month as an ending inventory..
firm will have an ending inventory of each month equal to 10% of the following month's needs

id in the month of purchase, and the remaining is paid in the following month. On January 1, 2017

2017

Jan Feb Mar Apr May

67,000 55,000 45,000 49,000 50,000

Co.
n Budget
er 2017
Feb Mar Apr
55,000 45,000 49,000
4,500 4,900 5,000
59,500 49,900 54,000
5,500 4,500 4,900
54,000 45,400 49,100

Co.
Budget
er 2017
Feb Mar Apr
54,000 45,400 49,100
*5 *5 *5
270,000 227,000 245,500
22,700 24,550
292,700 251,550
27,000 22,700
265,700 228,850

Co.
s Budget
er 2017

Feb Mar
185,990 160,195

---
 90468
111,594 74,396
96,117

202062 170,513
 The ABC Co.
Balance Sheet _ Partial
As on March 31, 2017

sales: 2,200,000 * 10: 220,000

es: 1,800,000 * 20% & 10% 540,000
Net receivable 660,000