The given is the actual and budgeted data of a company for the first period ended 31st March 2010:
a) 50% of sales are on a cash basis and 50% are on a credit basis.
b) Debtors are given one month’s credit.
c) Suppliers give one month’s credit.
d) Overheads are paid one month in arrears.
e) Overheads include Rs 2 000 in respect of the depreciation of fixed assets.
f) Wages are paid in the month in which they are incurred.
g) New machinery costing Rs 60 000 will be paid for in February.
h) The sale of old machinery will bring receipts of Rs 7 000 in March.
i) The bank balance is predicted to be Rs 13 000 on 1st January 2010.
a) Make a cash budget for the three months ending on 31st March 2010.
b) Outline the purposes of the budgetary control.