Page 211 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes Additional Information:
(a) Advance tax of 4,000 payable in June and in December 2008.
(b) Credit period allowed to debtors is two months.
(c) Credit period allowed by the vendors or suppliers.

(d) Delay in the payment of other expenses one month.
(e) Opening balance of cash on 1st June is estimated as 20,000.
5. The expenses for budgeted production of 10,000 units in a factory are furnished below:

Particulars Per unit
Material 70
Labour 25
Variable overheads 20
Fixed overheads (1,00,000) 10
Variable expenses (Direct) 5
Selling expenses (10% fixed) 13
Distribution expenses (20% fixed) 7
Administration expenses (Rs.50,000) 5
Total cost per unit 155

Prepare a budget for production of:

(a) 8,000 units
(b) 6,000 units
(c) Calculate the cost per unit at both levels.
Assume that administration expenses are fixed for all level of production.
6. From the following information relating to 2008 and conditions expected to prevail in
2009, prepare a budget for 2009:
State the assumption you have made, 2008 actuals
Sales 1,00,000 (40,000 units)

Raw materials 53,000
Wages 11,000
Variable overheads 16,000

Fixed overheads 10,000
2009 prospects
Sales 1,50,000 (60,000 units)
Raw Materials 5 per cent price increase
Wages 10 per cent increase in wage rates

5 per cent increase in productivity
Additional plant One lathe 25,000
One drill 12,000

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