Frambosa Limited is currently preparing budgets for September to December. Its estimated sales figures in units are as follows: September October November December Sales (units) 10,845 4,252 5,480 18,759 Inventories at 31 August totalled 16,358 units, and inventories are to be kept at a constant level for all months except December, when opening inventories on 1 December are to be increased to 20,182. Inventories will revert to the normal level on 31 December. Inventories will cost £2 per unit throughout the period, and suppliers allow Frambosa Ltd to pay in the month following an order. Other relevant information is that 12,060 units were bought in August. Requirement 1: Prepare Frambosa Ltd's inventories budget (in units) for September to December. Requirement 2: Prepare the information relevant to inventories purchases that would appear in the cash budget for the period. Requirement 1: Frambosa Ltd's inventories budget (in units) is as follows: (Fill in the relevant cells with its corresponding figures. Negative figures should be entered in brackets.) September October November December Opening inventories (A) Sales forecast (B) A - B = (C) Inventories purchase* (E - C) Closing inventories (E) * same as 'sales forecast' for each month except November and December, when inventories increase and then revert to normal. Requirement 2: Relevant information relating to inventories purchases for the cash budget is as follows: (Fill in the relevant cells with its corresponding figures.) August September October November December Inventories purchased (units) (A) Cost per unit (£) (B) 2 2 2 2 2 Cost of inventories bought (£) [A*B = (C)] Cash outflow (£)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Frambosa

Limited is currently preparing budgets for September to December. Its estimated sales figures in units are as follows:

	September	October	November	December
Sales (units)	10,845	4,252	5,480	18,759

Inventories at 31 August totalled

16,358

units, and inventories are to be kept at a constant level for all months except December, when opening inventories on 1 December are to be increased to

20,182.

Inventories will revert to the normal level on 31 December.

Inventories will cost £2 per unit throughout the period, and suppliers allow

Frambosa

Ltd to pay in the month following an order. Other relevant information is that

12,060

units were bought in August.

Requirement 1: Prepare

Frambosa

Ltd's inventories budget (in units) for September to December.

Requirement 2: Prepare the information relevant to inventories purchases that would appear in the cash budget for the period.

Requirement 1:

Frambosa

Ltd's inventories budget (in units) is as follows:

(Fill in the relevant cells with its corresponding figures. Negative figures should be entered in brackets.)

	September	October	November	December
Opening inventories (A)
Sales forecast (B)
A - B = (C)
Inventories purchase* (E - C)
Closing inventories (E)

* same as 'sales forecast' for each month except November and December, when inventories increase and then revert to normal.

Requirement 2: Relevant information relating to inventories purchases for the cash budget is as follows:

(Fill in the relevant cells with its corresponding figures.)

	August	September	October	November	December
Inventories purchased (units) (A)
Cost per unit (£) (B)	2	2	2	2	2
Cost of inventories bought (£) [A*B = (C)]
Cash outflow (£)

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