Q No.1 A company has a cash balance of Rs.27000 at the beginning of March and you are required to prepare a cash budget for March, April and May having regard to the following information. Creditors give 1 month credit Salaries are paid in the current month Fixed costs are paid one month in arrears and include a charge for depreciation of Rs.5000 per month. Credit sales are settled as follows: 40% in month of sales 45% in next month and 12% in the following month. The balance represents bad debts. MONTH CASH SALES CREDIT SALES PURCHASES SALARIES FIXED EXPENSE Jan 74,000 55,200 9,000 30,000 Feb 82,000 61,200 9,000 30,000 March 20,000 80,000 60,000 9,500 30,000 April 22,000 90,000 69,000 9,500 32,000 May 25,000 100,000 75,000 10,000 32,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Q No.1 A company has a cash balance of Rs.27000 at the beginning of March and you are required to prepare a
Creditors give 1 month credit
Salaries are paid in the current month
Fixed costs are paid one month in arrears and include a charge for
Credit sales are settled as follows:
40% in month of sales
45% in next month and 12% in the following month. The balance represents
|
MONTH |
CASH SALES |
CREDIT SALES |
PURCHASES |
SALARIES |
FIXED EXPENSE |
|
Jan |
74,000 |
55,200 |
9,000 |
30,000 |
|
|
Feb |
82,000 |
61,200 |
9,000 |
30,000 |
|
|
March |
20,000 |
80,000 |
60,000 |
9,500 |
30,000 |
|
April |
22,000 |
90,000 |
69,000 |
9,500 |
32,000 |
|
May |
25,000 |
100,000 |
75,000 |
10,000 |
32,000 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
