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The following budgeted statement of profit or loss has been prepared for Tata Ltd. for the four months January to April 2020 March April Gh¢ Jan Feb Gh¢ Gh¢ 60,000 50,000 70,000 60,000 Gh¢ Sales Cost of production (Increase)/decrease in stock (5,000) (17,500) 20,000 (5,000) 50,000 55,000 32,500 50,000 Cost of sales 45,000 37,500 52,500 45,000 Gross profit Adm & selling ov/hd 15,000 12,500 17,500 15,000 (8,000) (7,500) (8,500) (8,000) Net profit before interest 7,000 5.000 9,000 7,000 Additional Information: 1. 40% of the production cost relates to direct materials. Materials are bought in the month prior to the month in which they are used. 2. Purchases are paid for one month after purchase. 3. 30% of the production cost relates to direct labour which is paid for when it is used. 4. The remainder of the production cost is production overhead. 5. Gh¢5,000 per month is a fixed cost which includes Gh¢3,000 depreciation. Fixed production overhead costs are paid for when incurred. 6. The remaining overhead is variable. The variable production overhead is paid 40% in the month of usage and the balance one month later. Unpaid variable production overhead at the beginning of January is Gh¢9,000. The administration and selling costs are paid quarterly in advance on 1 January, 1 April, 1 July and 1 October. The amount payable is Gh¢15,000 per quarter. All sales are on credit. 20% of receivables are 7. 8.

The following budgeted statement of profit or loss has been prepared for Tata Ltd. for the four months January to April 2020 March April Gh¢ Jan Feb Gh¢ Gh¢ 60,000 50,000 70,000 60,000 Gh¢ Sales Cost of production (Increase)/decrease in stock (5,000) (17,500) 20,000 (5,000) 50,000 55,000 32,500 50,000 Cost of sales 45,000 37,500 52,500 45,000 Gross profit Adm & selling ov/hd 15,000 12,500 17,500 15,000 (8,000) (7,500) (8,500) (8,000) Net profit before interest 7,000 5.000 9,000 7,000 Additional Information: 1. 40% of the production cost relates to direct materials. Materials are bought in the month prior to the month in which they are used. 2. Purchases are paid for one month after purchase. 3. 30% of the production cost relates to direct labour which is paid for when it is used. 4. The remainder of the production cost is production overhead. 5. Gh¢5,000 per month is a fixed cost which includes Gh¢3,000 depreciation. Fixed production overhead costs are paid for when incurred. 6. The remaining overhead is variable. The variable production overhead is paid 40% in the month of usage and the balance one month later. Unpaid variable production overhead at the beginning of January is Gh¢9,000. The administration and selling costs are paid quarterly in advance on 1 January, 1 April, 1 July and 1 October. The amount payable is Gh¢15,000 per quarter. All sales are on credit. 20% of receivables are 7. 8.

FINANCIAL ACCOUNTING
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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The following budgeted statement of profit or loss has been prepared for Tata Ltd. for the four months January to April 2020 March April Gh¢ 60,000 50,000 70,000 60,000 Jan Feb Gh¢ Gh¢ Gh¢ Sales Cost of production (Increase)/decrease in stock 50,000 55,000 32,500 50,000 (5,000) (17,500) 20,000 (5,000) Cost of sales 45,000 37,500 52,500 45,000 Gross profit Adm & selling ov/hd 15,000 12,500 17,500 15,000 (8,000) (7,500) (8,500) (8,000) Net profit before interest 7,000 5,000 9,000 7,000 Additional Information: 40% of the production cost relates to direct materials. Materials are bought in the month prior to the month in which they are used. 2. Purchases are paid for one month after purchase. 1. 3. 30% of the production cost relates to direct labour which is paid for when it is used. 4. The remainder of the production cost is production overhead. 5. Gh¢5,000 per month is a fixed cost which includes Gh¢3,000 depreciation. Fixed production overhead costs are paid for when incurred. 6. The remaining overhead is variable. The variable production overhead is paid 40% in the month of usage and the balance one month later. Unpaid variable production overhead at the beginning of January is Gh¢9,000. The administration and selling costs are paid quarterly in advance on 1 January, 1 April, 1 July and 1 October. The amount payable is Gh¢15,000 7. per quarter. All sales are on credit. 20% of receivables are expected to be paid in the month of sale and 80% 8.
Transcribed Image Text:The following budgeted statement of profit or loss has been prepared for Tata Ltd. for the four months January to April 2020 March April Gh¢ 60,000 50,000 70,000 60,000 Jan Feb Gh¢ Gh¢ Gh¢ Sales Cost of production (Increase)/decrease in stock 50,000 55,000 32,500 50,000 (5,000) (17,500) 20,000 (5,000) Cost of sales 45,000 37,500 52,500 45,000 Gross profit Adm & selling ov/hd 15,000 12,500 17,500 15,000 (8,000) (7,500) (8,500) (8,000) Net profit before interest 7,000 5,000 9,000 7,000 Additional Information: 40% of the production cost relates to direct materials. Materials are bought in the month prior to the month in which they are used. 2. Purchases are paid for one month after purchase. 1. 3. 30% of the production cost relates to direct labour which is paid for when it is used. 4. The remainder of the production cost is production overhead. 5. Gh¢5,000 per month is a fixed cost which includes Gh¢3,000 depreciation. Fixed production overhead costs are paid for when incurred. 6. The remaining overhead is variable. The variable production overhead is paid 40% in the month of usage and the balance one month later. Unpaid variable production overhead at the beginning of January is Gh¢9,000. The administration and selling costs are paid quarterly in advance on 1 January, 1 April, 1 July and 1 October. The amount payable is Gh¢15,000 7. per quarter. All sales are on credit. 20% of receivables are expected to be paid in the month of sale and 80% 8.
in the following month. Unpaid trade receivables at the beginning of January were Gh¢44,000. The company intends to purchase capital equipment costing Gh¢30,000 in February which will be payable in March. The bank balance on 1 January 2020 is expected to be Gh¢5,000 overdrawn. 9. 10. Required: Prepare a cash Budget for January to March 2020
Transcribed Image Text:in the following month. Unpaid trade receivables at the beginning of January were Gh¢44,000. The company intends to purchase capital equipment costing Gh¢30,000 in February which will be payable in March. The bank balance on 1 January 2020 is expected to be Gh¢5,000 overdrawn. 9. 10. Required: Prepare a cash Budget for January to March 2020
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