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18. Z Ltd. had a profit plan approved for selling 5,000 units per month at an average price of Rs. 10 per unit. The budgeted variable cost of production was Rs. 4 per unit and the fixed costs were budgeted at Rs. 20,000, the planned income being Rs. 10,000 per month, Due to shortage of raw materials, only 4,000 units could be produced and the cost of production increased by 50 paise per unit. The selling price was raised by Re. 1.00 per unit. In order to improve the production process, an expenditure of Rs. 1,000 was incurred for research and development activities. You are required to prepare a Performance Budget and a Summary Report.

19. Solution… 5000 6000 10000 Profit 21000 20000 20000 Fixed cost 26000 26000 30000 Contribution 4000*4.5 4000*4 5000*4 Variable cost 4000*11 4000*10 5000*10 Sales Actual position Adjusted plan Original plan Particulars

21. Prepare cash budget from the following figures: first row is for material received, second column is for sales and third column is for other expenses. We receive payment from debtors after 3 months and we make payment after 2 months to suppliers. Balance of cash on 1 april is 10000. 13,000 51,000 34,000 august 12,500 48,000 32,000 july 12,000 45,000 30,000 june 11,500 42,000 28,000 may 11,000 39,000 26,000 april 10,500 36,000 24,000 March 10,000 33,000 22,000 february 9,500 30,000 20,000 january

22. Solution… it is clear that we have to withdraw more cash in the month of August to meet our cash requirements in September. 0 43,000 42,000 1,000 August 1,000 40,500 39,000 2,500 July 2,500 38,000 36,000 4,500 June 4,500 35,500 33,000 7,000 May 7,000 33,000 30,000 10,000 april : cl. Balance payments receipts opening balance

26. Solution… (flexible budget) 11080 11540 12000 Total cost : 1280 1440 1600 Semi variable : variable 2400 2400 2400 Semi variable : fixed : 2400 2700 3000 Variable cost 5000 5000 5000 Fixed cost 800 900 1000 No. of units 80% 90% 100% particulars