problem 1) Answer all the problems:

1) Briefly describe budget. prepare down the difference between budgeting and budget.

2) What is production budget? Why it is prepared.

3) Describe the importance of cash budget.

4) describe the major objectives of budgeting control.

5) Describe the meaning of product mix.

problem 2) What do you understand by business forecasting? Describe its importance and limitation.

problem 3) What do you understand by zero base budgeting? describe its essential features. How it differs from traditional budgeting.

problem 4) From the following information prepare cash budget for the quarter April to June:

Months    Sales    Purchase    Wages    Factory Overhead    Office Overhead
Jan         90,000    40,000      9,000        5,000                        7,000
Feb      1,00,000    50,000    10,000        5,000                        7,000
March   1,10,000    55,000    11,000        5,500                        7,500
April     1,20,000    60,000    12,000        6,000                        8,000
May     1,30,000    65,000    13,000         6,500                         8,500
June    1,40,000    70,000    14,000         7,000                         9,000

ADDITIONAL INFORMATION:

a) Expected cash balance on 1st April is 11,000.

b) 40% of total sales will be in cash . 75% of credit sales would be realized after one month of the sales and rest after two months.

c) Purchase would always be made for cash to avail cash discount @8%.

d) Wages will be paid after an interval of 15 days on 1st and 16th of each month.

e) Factory overheads would be paid after an interval of month.