Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Cost Accounting Expert

Wise Start Ltd, a newly formed company is to start trading from 1 January next. You have been asked to help with their financial predictions.

1) They plan to sell their product at an initial selling price of Rs 60 each; however as an incentive, the selling price will be decreased to Rs 50 for the month of April and May only. The sales budget in units is:

1526_sales budget.jpg

All the sales will be on credit and it is expected that half of debtors will take one month’s credit and the remainder will take two months.

2) Purchase price will be Rs 40 per unit. Though, when monthly purchases exceed 15,000 units, a special quantity discount of 5 % will be given by the supplier.

3) The stock will be maintained on the first in first out (FIFO) system at a constant level of 6000 units, and the initial stock will be purchased on 1 January. The suppliers of the product have agreed to give one and a half month’s credit terms, that is, all stock purchased in January will be paid in the middle of March.

4) Delivery, post and parking will cost Rs 3 per unit sold and will be paid as incurred. Other costs will be constant at Rs 85,000 per months and Wise Start Ltd will be given one month’s credit.

5) Rent will cost Rs 240,000 per annum and is payable quarterly in advance. Equipment costing Rs 1,800,000 will be purchased and paid for on 1st January and is to be depreciated at the rate of 15 % per annum based on cost.

6) As the company doesn’t have an established track record it is not able to borrow money. The shareholders agree to put in just adequate capital to make sure that the minimum balance on the bank never falls below Rs 1,000. They as well agree that a dividend equivalent to 10 % of the subscribed share capital be declared out of the first six months’ of trading result and be paid to them on 1 September next.

Required:

a) Make a cash budget for the first six months of trading from January to June inclusive.

b) In brief describe some advantages of cash budget, making reference to an organization of your preference.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M96574

Have any Question? 


Related Questions in Cost Accounting

Instructionsnbspbull all questions carry equal marksbull

Instructions:   • All Questions carry equal marks. • All Questions are compulsory • All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3in not more than 500 words for each subse ...

Accounting assignmentmotorcade company has three service

Accounting Assignment Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs:   Budget ...

Case questions rio grande medical center cost allocation

CASE QUESTIONS RIO GRANDE MEDICAL CENTER Cost Allocation Concepts 1. Is it "fair" for the Dialysis Center to suffer in profitability, and hence for the department head to possibly lose his bonus, just because the Outpati ...

Cost accounting- little debbie brownieshere is a copy of

Cost Accounting- Little Debbie Brownies Here is a copy of the assignment. My snack of choice is the Little Debbie Fudge Brownies Comprehensive Product Costing Select your favorite drink or snack item manufactured by a pu ...

Assignment discussion-cost accumulation systemwhen

Assignment: Discussion-Cost Accumulation System When companies accumulate costs, they generally use either a job-order or a process costing system. The type of system used often varies based on the type of product or ser ...

Problem 1 master budgetomega inc has developed the

Problem 1: Master Budget Omega, Inc. has developed the following sales forecast for the first six months of the coming year Month Sales (in units) January 30,000 February 50,000 March 70,000 April 80,000 May 60,000 June ...

Cost of capital assignment questions -1 what does the cost

Cost of Capital Assignment Questions - 1. What does the cost of capital represents? What is should reflect? 2. How do taxes affect the cost of debt? 3. What are the retained earnings? Do they have any costs for the firm? ...

Cost accountingquestion 1 which of the following statements

Cost Accounting Question 1. Which of the following statements regarding differential costs is (are) false? (A). The full cost fallacy occurs when a decision-maker fails to include fixed manufacturingoverhead in the produ ...

Assignmentdolan products is a small family owned audio

Assignment Dolan Products is a small, family owned audio component manufacturer. Several years ago, the company decided to concentrate on only three models, which were sold under many brand names to electronic retailers ...

Cost behaviordetermining cost behavior please respond to

Cost Behavior Determining Cost Behavior: Please respond to one of the following: Option 1 Choose a company that interests you. It could be your current employer, a past employer, or even a future employer. Compare and co ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro