2 a dividend of rs 10000 is payable in april 3

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2. A dividend of Rs. 10,000 is payable in April. 3. Capital expenditure to be incurred: Plant ‘purchased on 15th January for Rs. 5,000, a Building has been purchased on 1st March and the payments are to be made in monthly instalments of Rs. 2,000 each. 4. The creditors are allowing a credit of 2 months. 5. Wages are paid on the 1st on the next month. 6. Lag in payment of other expenses is one month. 7. Balance of cash in hand on 1st January, 2016 is Rs. 15,000
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198 Other Exercise for practice 1. M.K. Exports Ltd. wishes to arrange overdraft facilities with its bankers during the period April-June 2006 when it will be manufacturing mostly for stocks. Prepare a cash budget for this period from the following data, indicating the extent of the bank facilities the company will require at the end of each month. Period (2006) Sales (Rs.) Purchases (Rs.) Wages (Rs.) February 180000 124000 12000 March 192000 144000 14000 April 108000 243000 11000 May 174000 246060 10000 June 126000 268000 15000 50% of the sales are realised in the following the sales and the remaining 50% in the second month following. Creditors are paid in the month following the month of purchase. Cash at bank on 1 st April 2006 is Rs.25000. 2. Prepare a flexible budget for production at 80% and 100% activity on the basis of the following information: Production at 50% capacity 5000 Units Raw Materials Rs.80 per unit Direct Labour Rs.50 per unit Direct Expenses Rs.15 per unit Factory Expenses Rs.50000 (50% fixed) Administration Expenses Rs.60000 (60% variable) 3. Draw up a flexible budget for overhead expenses on the basis of the following data and determine the overhead rates at 70%, 80% and 90% plant capacity. At 80% Capacity Rs. Variable Overheads: Indirect labour 12,000 Stores including spares 4,000 Semi-variable Overheads: Power (30% fixed, 70% variable) 20,000 Repairs and maintenance (60% fixed, 40% Variable) 2,000 Fixed Variable: Depreciation 11,000 Insurance 3,000 Salaries 10,000 Total Overheads 62,000 Estimated direct labour hours 1,24,000 hrs.
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199 4. The expenses budgeted for production of 10000 units in a factory are furnished below: Rs. per Unit Material 70 Labour 25 Variable Overheads 20 Fixed overheads (Rs.100000) 10 Variable expenses (direct) 5 Selling expenses (10% direct) 13 Distribution expenses (20% fixed) 7 Administration Expenses (Rs.50000) 5 Total 155 Prepare a budget for the purpose of (a)8000 units and (b)6000 units. Assume that administration expenses are rigid for all levels of production. 5. From the following data, prepare a flexible budget for production of 40000 units and 75000 units, distinctly showing variable cost and fixed cost as well as total cost. Also indicate element-wise cost per unit. Budgeted output is 100000 units and budgeted cost per unit is as follows: Rs. Direct Material 95 Direct Labour 50 Production overhead (variable) 40 Production overhead (fixed) 5 Administration overhead (fixed) 5 Selling overhead (10% fixed) 10 Distribution overhead (20% fixed) 15 6. Z limited has prepared the budget for the production of 100000 units from a costing period as under: Per Unit (Rs.) Raw Materials 10.08 Direct Labour 3.00 Direct Expenses 0.40 Works overhead (60% fixed) 10.00 Administration overhead (80% fixed) 1.60 Sales overhead (50% fixed) 0.80
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200 Actual production in the period was only 60000 units. Prepare budgets for the original and revised levels of output.
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