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    Unit 7 Budgeting Solutions

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    Yogesh Bandi
    The document contains information about flexible budgets at different activity levels (60%, 75%, 90%, 100%) including sales, variable costs, semi-variable costs, fixed costs and projected profits. It provides flexible budget templates for different scenarios showing calculations of sales, costs and profits at varying levels of activity. The templates include calculations for materials, labour, other expenses, fixed overhead costs and projected profits. The document demonstrates how to create flexible budgets to forecast costs and profits under changing market conditions. The budgets help predict performance at different volume levels to aid planning and decision making.

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    Unit 7 Budgeting Solutions

    Uploaded by

    Yogesh Bandi
    77 views15 pages
    The document contains information about flexible budgets at different activity levels (60%, 75%, 90%, 100%) including sales, variable costs, semi-variable costs, fixed costs and projected profits. It provides flexible budget templates for different scenarios showing calculations of sales, costs and profits at varying levels of activity. The templates include calculations for materials, labour, other expenses, fixed overhead costs and projected profits. The document demonstrates how to create flexible budgets to forecast costs and profits under changing market conditions. The budgets help predict performance at different volume levels to aid planning and decision making.

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    The document contains information about flexible budgets at different activity levels (60%, 75%, 90%, 100%) including sales, variable costs, semi-variable costs, fixed costs and projected profits. It provides flexible budget templates for different scenarios showing calculations of sales, costs and profits at varying levels of activity. The templates include calculations for materials, labour, other expenses, fixed overhead costs and projected profits. The document demonstrates how to create flexible budgets to forecast costs and profits under changing market conditions. The budgets help predict performance at different volume levels to aid planning and decision making.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    77 views15 pages

    Unit 7 Budgeting Solutions

    Uploaded by

    Yogesh Bandi
    The document contains information about flexible budgets at different activity levels (60%, 75%, 90%, 100%) including sales, variable costs, semi-variable costs, fixed costs and projected profits. It provides flexible budget templates for different scenarios showing calculations of sales, costs and profits at varying levels of activity. The templates include calculations for materials, labour, other expenses, fixed overhead costs and projected profits. The document demonstrates how to create flexible budgets to forecast costs and profits under changing market conditions. The budgets help predict performance at different volume levels to aid planning and decision making.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 15

    Budgeting

    Production Budget
    RM Purchase Bud Rolling Bud
    Marketing Exps
    Finance Responsibility Bud
    Cash Bud
    HR Zero based Budgeting
    R&D

    Master Budget

    Flexible Budgets At 50% At 75% At 100%


    ponsibility Bud

    o based Budgeting
    Problem 1

    Flexible Budget
    Particulars At 60% cap (Rs.) At 75% cap (Rs.) At 90% cap (Rs.)

    Sales 950,000.00 1,150,000.00 1,375,000.00


    Variable costs:
    Materials 288,000.00 360,000.00 432,000.00
    Labour 307,200.00 384,000.00 460,800.00
    Other exps 45,600.00 57,000.00 68,400.00
    Total Variable Cost 640,800.00 801,000.00 961,200.00
    Fixed Cost:
    Salaries 84,000.00 84,000.00 84,000.00
    Rent and Rates 56,000.00 56,000.00 56,000.00
    Depreciation 70,000.00 70,000.00 70,000.00
    Other Admn. Exps. 80,000.00 80,000.00 80,000.00
    Total Fixed Cost 290,000.00 290,000.00 290,000.00
    Total Cost (VC + FC) 930,800.00 1,091,000.00 1,251,200.00
    Forecasted Profit 19,200.00 59,000.00 123,800.00
    At 100% cap
    (Rs.)
    1,525,000.00

    480,000.00 240000/50 * 60/75/90/100


    512,000.00
    76,000.00
    1,068,000.00

    84,000.00
    56,000.00
    70,000.00
    80,000.00
    290,000.00
    1,358,000.00
    167,000.00
    Problem 2

    Flexible Budget
    At 100% cap
    Particulars At 60% cap (Rs.) At 80% cap (Rs.) (Rs.)
    Sales Revenue 510,000.00 680,000.00 850,000.00
    Less Costs:
    Variable Costs 320,400.00 427,200.00 534,000.00
    Semi-Variable Cost 89,500.00 98,450.00 102,925.00
    Fixed Cost 149,500.00 149,500.00 149,500.00
    Total Cost 559,400.00 675,150.00 786,425.00
    Forecasted Profit/(loss) -49,400.00 4,850.00 63,575.00
    267000/50 *60/80/100
    89500 * 1.10 89500 * 1.15
    Problem 3

    Flexible Budget
    Number of units produced
    80,000 150,000 220,000 290,000
    Selling Price Rs. 15 Rs. 14 Rs. 13 Rs. 12
    Total Sales Revenue 1,200,000.00 2,100,000.00 2,860,000.00 3,480,000.00
    Costs:
    Variable Costs 400,000.00 750,000.00 1,100,000.00 1,500,000.00
    Semi-Fixed Costs 230,000.00 230,000.00 260,000.00 260,000.00
    Fixed Costs 200,000.00 200,000.00 200,000.00 200,000.00
    Total Costs 830,000.00 1,180,000.00 1,560,000.00 1,960,000.00

    Budgeted Income 370,000.00 920,000.00 1,300,000.00 1,520,000.00

    Thus, 4,30,000 units is the desired volume which should be set for the budgeted output as the company has th
    units produced 80000 - 500000
    360,000 430,000 500,000 420000 / 6
    Rs. 11 Rs. 10 Rs. 9 70000 units equal increment
    3,960,000.00 4,300,000.00 4,500,000.00

    1,750,000.00 2,050,000.00 2,500,000.00 5


    280,000.00 280,000.00 320,000.00 750000
    200,000.00 200,000.00 200,000.00 1100000
    2,230,000.00 2,530,000.00 3,020,000.00

    1,730,000.00 1,770,000.00 1,480,000.00

    d output as the company has the maximum budgeted income of Rs.17,70,000.


    Problem 4

    Flexible Budget
    At 100% cap
    Particulars At 60% cap (Rs.) At 75% cap (Rs.) At 90% cap (Rs.) (Rs.)
    Sales 120.00 150.00 180.00 200.00
    Variable costs:
    Material 26.04 32.55 39.06 43.40
    Labour 24.48 30.60 36.72 40.80
    Other Exps 9.48 11.85 14.22 15.80
    Total Variable Cost 60.00 75.00 90.00 100.00
    Semi-Variable Cost:
    Maintenance & Repairs 3.50 3.85 4.20 4.20
    Indirect Labour 7.90 8.69 9.48 9.48
    Sales dept. Salaries 3.80 4.18 4.56 4.56
    Sundry Admn. Exps 2.80 3.08 3.36 3.36
    Total Semi-Variable Costs 18.00 19.80 21.60 21.60
    Fixed Cost:
    Wages & Salaries 9.50 9.50 9.50 9.50
    Rent, Rates & Taxes 6.60 6.60 6.60 6.60
    Depreciation 7.40 7.40 7.40 7.40
    Sundry Admn. Exps 6.50 6.50 6.50 6.50
    Total Fixed Cost 30.00 30.00 30.00 30.00
    Total Cost (VC + SVC + FC) 108.00 124.80 141.60 151.60
    Forecasted Profit 12.00 25.20 38.40 48.40
    (Rs. In Lakhs)
    Problem 5

    Cash Budget for 6 months period from July to December

    Particulars July (Rs.) Aug (Rs.) Sep (Rs.) Oct (Rs.)


    Opening Cash Balance 6.00 5.00 5.00 5.00
    Add Receipts
    Collection from customers 12.00 21.00 31.00 35.00

    Total Receipts (A) 18.00 26.00 36.00 40.00


    Payments:
    Purchases 14.00 21.00 28.00 14.00
    Wages and Salaries 1.50 2.00 2.50 1.50
    Rent 0.50 0.50 0.50 0.50
    Other exps. 0.20 0.30 0.40 0.20
    Taxes 4.00
    Payment for Plant Const. 10.00

    Total Payments (B) 16.20 23.80 35.40 26.20


    Net Cash receipts/payments
    (A-B) 1.80 2.20 0.60 13.80
    Minimum Cash Balance 5.00 5.00 5.00 5.00
    Borrowing required 3.20 2.80 4.40 -8.80
    Closing Cash Balance 5.00 5.00 5.00 5.00
    ecember Workings
    (Rs. In Lakhs) 1.Collection from customers:
    Nov (Rs.) Dec (Rs.) Jul Aug Sep Oct
    5.00 9.20 May 1.00
    June 7.00 1.00
    22.00 18.00 July 4.00 14.00 2.00
    Aug 6.00 21.00 3.00
    27.00 27.20 Sep 8.00 28.00
    Oct 4.00
    14.00 7.00 Nov
    1.50 1.00 Dec
    0.50 0.50 12.00 21.00 31.00 35.00
    0.20 0.10
    4.00
    20% during the month of sales
    70% during the second month of sales
    16.20 12.60 10% during the third month of sales

    10.80 14.60
    5.00 5.00
    -1.60 -
    9.20 14.60
    Nov Dec

    4.00
    14.00 2.00
    4.00 14.00
    2.00
    22.00 18.00
    Problem 6

    Cash Budget for 6 months period from Jan to June

    Particulars Jan (Rs.) Feb (Rs.) Mar (Rs.) Apr (Rs.) May (Rs.)
    Opening Cash Balance 16.00 10.00 10.00 10.00 10.00
    Add Receipts
    Collection from customers 10.00 20.00 40.00 50.00 60.00

    Total Receipts (A) 26.00 30.00 50.00 60.00 70.00


    Payments:
    Purchases 40.00 50.00 60.00 90.00 50.00
    Salary 3.00 5.00 7.00 9.00 11.00
    Selling & Dist. Exps 2.00 4.00 5.00 6.00 9.00
    Payment for New equipment 5.00

    Total Payments (B) 45.00 59.00 77.00 105.00 70.00


    Net Cash receipts/payments
    (A-B) -19.00 -29.00 -27.00 -45.00 -
    Minimum Cash Balance 10.00 10.00 10.00 10.00 10.00
    Borrowing required 29.00 39.00 37.00 55.00 10.00
    Closing Cash Balance 10.00 10.00 10.00 10.00 10.00
    Working
    (Rs. In Lakhs) Sales GP (20%) COGS Purchases (125%)
    June (Rs.) Jan 20 4 16 40
    10.00 Feb 40 8 32 50
    Mar 50 10 40 60
    90.00 Apr 60 12 48 90
    May 90 18 72 50
    100.00 June 50 10 40 10
    Jul 10 2 8
    10.00
    6.00
    5.00

    21.00

    79.00
    10.00
    -69.00
    10.00

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