FINANCIAL PLANNING

BUDGETARY CONTROL IMPLIES THE USE OF VARIOUS BUDGETS IN PLA

BUDGET IS AN ESTIMATE OF FUTURE NEEDS . THE TERM BUDGET DERIVED FROM LATIN WO
BUDGET IS PREPARED FOR A DEFINITE PERIOD . IT IS A FORECAST IS A PREDICTION
MAIN OBJECTIVES OF SETTING BUDGET
1 IT SERVERS DECLARTION OF POLICIES
2 IT DEFINES OBJECTIVES/ TARGETS AT ALL LEVELS OF MANAGEMENTS
3 IT PROVIDES MEANS OF CORDINATION
4 IT PROVIDES MEANS OF COMMUNICATION
5 IT FACILITATES CENTRALISED CONTROL
BUDGETARY CONTROL IS RELATING TO THE RESPOSIBILITIES OF EXCECUTIVE TO T
AND A CONTINUOUS COMPARISION OF ACTUAL WITH BUDGETED RESULTS
BUDGETORY CONTROL INCLUDES
1 PLANNING
2 CO-ORDINATION
3 CONTROL
4 COMMUNICATION
TYPES OF BUDGETS
1 FUNCTIONAL BUDGET
SALES BUDGET
PRODUCTION BUDGET
PURCHASE BUDGET
CASH BUDGET
2 MASTER BUDGET IT IS A SUMMARY OF ALL FUCT
FINALLY APPROVED, ADOPTED AND EMPLOYED
FLEXIBLE BUDGET IT IS A BUDGET DESIGNED TO CHANGE IN ACCORDING TO LEVEL OF ACT
Q1 THE EXPENSES BUDGETED FOR PRODCTION OF 100% CAPACITY AS FOLLOWS
PARTICULARS
LABOUR
MATERIAL
VARIABLE EXPENSES [DIRECT]
VARIABLE OVERHEADS
FIXED OVERHEADS
ADMINISTRATION OVERHEADS[FIXED]
SELLING EXPENSES [ 10% FIXED]
DISTRIBUTION EXPENSES [20% FIXED]
PREPARE A BUDGET FOR 60% AND 80% CAPACITY
ANS PARTICULARS 100%
RS
MATERIAL 200000
LABOUR 600000
DIRECT EXPENSES 40000
PRIME COST 840000
VARIABLE OVERHEADS 200000
 FIXED OVER HEADS 80000
ADMINISRATION OVERHEDS 40000
COST OF PRODUCTION 1160000
SELLING EXPENSES
FIXED [10% 120000] 12000
VARIABLE [90% 120000] 108000
DISTRIBUTION EXPENSES
FIXED [20%60000] 12000
VARIABLE [80% 60000] 48000
TOTAL COST 1340000

Q2 A FACTORY PRODUCES 20000 UNITS . THE BUDGETED EXPENSES AS FOLLOWS

PARTICULARS
MATERIAL
LABOUR
DIRECT EXPENSES
VARIABLE OVERHEADS
FIXED OVERHEDS
ADMINISTRATION OVERHEADS [FIXED]
SELLING EXPENSES [ 10% FIXED]
DISTRIBUTION EXPENSES [ 25% FIXED]

PREPARE BUDGET FOR 15000 AND 10000 UNITS

ANS 20000
RS
MATERIAL 1500000
LABOUR 400000
DIRECT EXPENSES 500000
PRIME COST 2400000
VARIABLE OVERHEADS 300000
FIXED OVERHEADS 400000
ADM OVERHEADS 200000
COST OF PRODUCTION 3300000
SELLING EXPENSES
FIXED [10% 15] 30000
VARIABLE [90% 15] 270000
DISRTIBUTION EXPENSES
FIXED [25%20] 100000
VARIABLE [75%20] 3000000
TOTAL COST 4000000
 Q3 S LTD PROVIDES FOLLOWING DETAILS AT 20000 UNITS
PARTICULARS RS
DIRECT MATERIAL 1400000 VARIABLE
DIRECT LABOUR 1000000
FACTORY OVERHEADS
LIGHTING 480000
REPAIRS 600000
DEPRECIATION 360000
OFFFICE OVERHEADS 200000
SELLING OVERHEADS 220000
TOTAL 4260000
PREPARE PRODUCTION BUDGET 12000 AND 16000 UNITS
ANS FLEXIBLE BUDGET
PARTICULARS 20000
TOTAL COST CPU
[RS]
DIRECT MATERIAL 1400000
DIRECT LABOUR 1000000
PRIME COST 2400000
FACTORY OVERHEADS
LIGHTING
VARIABLE [480000*75%] 360000
FIXED [480000*25%] 120000
REPAIRS
VARIABLE [600000*50%] 300000
FIXED [600000*50%] 300000
DEPRECIATION [100% VARI] 360000
WORKS COST 3840000
OFFICE OVERHEADS
VARIABLE [10% 200000] 20000
FIXED [90% 200000] 180000
COST OF PRODUCTION 4040000
SELLING OVERHEADS
VARIABLE [ 50% 220000] 110000
FIXED [50% 220000] 110000
TOTAL COST 4260000

Q4 FOLLOWING EXPENSES FOR PRODUCTION OF 15000 UNITS

PARTICULARS
MATERIAL
LABOUR
VARIABLE EXPENSES
FIXED EXPENSES
VARIABLE OVERHEADS
SELLING EXPENSES [10% FIXED] 18
 DISRTIBUTION EXPENSES [20% FIXED] 12
ADMINISTRATION EXPE [FIXED] 10

PREPARE BUDGET FOR 15000 , 12000 , 10000 UNITS

SALES BUDGET
SALES = OPENING STOCK + PURCHASES _CLOSING STOCK
PRODUCTION = SALES +CLOSING STOCK - OPENING STOCK
Q1 THE SALES DIRECTOR OF A COMPANY REPORTS THAT NEXT YEAR HE EXPECTS TO S
TWO KINDS OF RAWMATERIAL A AND B REQURIED FOR THE SAME
EACH UNIT OF THE PRODUCT REQUIRE 2 UNITS OF A AND 3 UNITS OF B
STOCK DETAILS AS FOLLOWS OPENING
FINISHED PRODUCT 10000
A 12000
B 15000
PREPARE SALES BUDGET AND PURCHASE BUDGET

ANS SALES [UNITS] = OPENING STOCK + PRODUCTION

10000+54000 -14000

PURCHASE BUDGET A
RAW MATERIAL [54000*2] 108000
[54000*3]
ADD OPENING STOCK 12000
120000
LESS CLOSING STOCK 13000
PURCHASE OF RAW MATERIAL 107000

Q2 A COMPANY PLAN TO SELL 108000 UNITS OF A PRODUCT IN THE FIRST QUARTER ,

132000 IN THE THIRD AND 156000 IN LAST AND 138000 IN THE FIRST QUARTER OF
AT THE BEGINNING OF THE FIRST QUARTER THERE ARE 18000 UNITS IN STOCK . A
QUARTER THE COMPANY PLANS HAVE AN INVENTORY 1/6 TH OF SALES OF NEXT Q
PREPARE PRODUCTION BUDGET OF EACH QUARTER

ANS PRODUCTION SALES + CLOSING STOCK - OPENING STOCK

PRODUCTION BUDGET [UNITS]

PARTICULARS I II
SALES 108000 120000
ADD CLOSING STOCK [1/6 NEXT SALES] 20000 22000
128000 142000
LESS OPENING STOCK 18000 20000
PRODUCTION [UNITS] 110000 122000

Q3 FOLLOWING ARE THE ESTIMATED SALES OF A COMPANY FOR EIGHT MONTHS

 MONTH SALES [UNITS]
APRIL 12000
MAY 13000
JUNE 9000
JULY 8000
AUGUST 10000
SEPT 12000
OCT 14000
NOV 12000
STOCK OF FINISHED GOODS ARE 50% OF SALES NEXT MONTH
STOCK OF RAW MATERIAL CONSUMPTION ESIMATED FOR NEXT MONTH
EVERY UNIT OF PRODCTION REQURIES 2 KG RAWMATERIAL COSTING RS 5 PER KG
PREPARE PRODUCTION BUDGET AND PURCHASE BUDGET UPTO SEPT

ANS PRODUCTION BUDGET FOR HALF YEAR ENDED 30tH SEPT

PARTICULARS APRIL
SALES 12000
ADD CLOSING STOCK [50% OF NEXT MONTH] 6500
18500
LESS OPENING STOCK 6000
PRODUCTION [UNITS] 12500

RAW MATERIAL PURCHASE BUDGET FOR HALF YEAR ENDED 30th SEPT
PARTICULARS APRIL
MATERIAL FOR PRODUCTION
@ 2 KG PER UNIT 25000
ADD CLOSING STOCK OF RAW MATERIAL 22000
47000
LESS OPENING STOCK OF RAW MATERIAL 25000
PURCHASES IN KG 22000
COST OF PURCHASES @ RS 5 PER KG 110000

Q5 FROM THE FOLLOWING INFORMATION RELATED TO A LTD

APRIL 1100
MAY 1100
JUNE 1700
JULY 1900
AUG 2500
SEPT 2300
OCT 2000
STOCK OF FINISHED GOODS 50% OF NEXT MONTH SALES
EACH UNIT REQUIRES 3 KG OF RAWMATERIAL COST RS 10 PER KG
STOCK OF RAWMATERIAL IS NEXT MONTH CONSUMPTION
PREPARE PRODUCTION BUDGET AND PURCHASE BUDGET FOR SIX MONTHS ENDE
 OF VARIOUS BUDGETS IN PLANNING AND CONTROLLING
ET DERIVED FROM LATIN WORD BOUGETTS
AST IS A PREDICTION

LEVELS OF MANAGEMENTS

IBILITIES OF EXCECUTIVE TO THE REQUIREMENTS OF A POLICY,

TH BUDGETED RESULTS

T IS A SUMMARY OF ALL FUCTIONAL BUDGET WHICH IS

ACCORDING TO LEVEL OF ACTIVITIES

% CAPACITY AS FOLLOWS
RS
600000
200000
40000
200000
80000
40000
120000
60000

60% 80%
RS RS
120000 160000
360000 480000
24000 32000
504000 672000
120000 160000
 80000 80000
40000 40000
744000 952000

12000 12000
64800 86400

12000 12000
28800 38400
861600 1100800

D EXPENSES AS FOLLOWS
RS [PER UNIT]
75
20
25
15
20
10
15
20
200

15000 10000
CPU RS CPU RS CPU
75 1125000 75 750000 75
20 300000 20 200000 20
25 375000 25 250000 25
120 1800000 120 1200000 120
15 225000 15 150000 15
20 400000 26.67 400000 40
10 200000 13.33 200000 20
165 2625000 175 1950000 195

1.5 30000 2 30000 3

13.5 202500 13.5 135000 13.5

5 100000 6.67 100000 10

15 225000 15 150000 15
200 3182500 212.17 2365000 236.5
 20000 UNITS
NATURE
1400000 VARIABLE
VARIABLE

75% VARIABLE
50% FIXED
100% VARIABLE
10% VARIABLE
50% FIXED

ND 16000 UNITS

12000 16000
TOTAL COST CPU TOTAL COST CPU TOTAL COST CPU
[RS] [RS] [RS] [RS] [RS]
70 840000 70 1120000 70
50 600000 50 800000 50
120 1440000 120 1920000 120

18 216000 18 288000 18
6 120000 10 120000 7.5

15 180000 15 240000 15
15 300000 25 300000 18.75
18 216000 18 288000 18
192 2472000 206 3156000 197.25

1 12000 1 16000 1
9 180000 15 180000 11.25
202 2664000 222 3352000 209.5

5.5 66000 5.5 88000 5.5

5.5 110000 9.17 110000 6.875
213 2840000 236.67 3550000 221.875

N OF 15000 UNITS
PER UNIT [RS]
75
30
25
15
10
10% FIXED] 18
NSES [20% FIXED] 12
XPE [FIXED] 10
195

CHASES _CLOSING STOCK

NG STOCK - OPENING STOCK
AT NEXT YEAR HE EXPECTS TO SELL 54000 UNITS OF A PRODUCT
FOR THE SAME
A AND 3 UNITS OF B
CLOSING
14000
13000
16000

50000

B
162000

15000
177000
16000
161000

DUCT IN THE FIRST QUARTER , 120000 IN THE SECOND,

000 IN THE FIRST QUARTER OF NEXT YEAR
RE 18000 UNITS IN STOCK . AT THE END OF EACH
RY 1/6 TH OF SALES OF NEXT QUARTER

OCK - OPENING STOCK

III IV
132000 156000
26000 23000
158000 179000
22000 26000
136000 153000

ANY FOR EIGHT MONTHS

TERIAL COSTING RS 5 PER KG
CHASE BUDGET UPTO SEPT

NDED 30tH SEPT W.NOTE

MAY JUNE JULY AUGUST SEPT OCT
13000 9000 8000 10000 12000 14000
4500 4000 5000 6000 7000 6000
17500 13000 13000 16000 19000 20000
6500 4500 4000 5000 6000 7000
11000 8500 9000 11000 13000 13000

R HALF YEAR ENDED 30th SEPT

MAY JUNE JULY AUGUST SEPT

22000 17000 18000 22000 26000

17000 18000 22000 26000 26000
39000 35000 40000 48000 52000
22000 17000 18000 22000 26000
17000 18000 22000 26000 26000
85000 90000 110000 130000 130000

SALES
UNITS

NOV 2200
MONTH SALES
RIAL COST RS 10 PER KG
H CONSUMPTION
DGET FOR SIX MONTHS ENDE 30th SEPT