Reference no: EM132598400
Problem 1: A Chemical manufacturing company has budgeted capacity of 10000 direct labor hours per month that is used to calculate predetermined factory overhead rate. At this capacity, company' budgeted fixed factory overhead is Rs. 75000 with variable overhead rate at Rs. 5 per labor hour.
During the month, labor worked for 12000 hours. However, company uses standard cost system and labor work for 3 hours to produce one unit when company operates at standard. Company produces 3000 units during the month. Company's actual factory overheads are Rs. 230000.
Required: Calculate two factory overhead and three factory overhead variances.
Problem 2: A Company wants to prepare cash budget based on the following information. Forecast the cash position for the months of October, November and December. Complete company's estimate.
August
Sales = Rs. 440000
Purchases = Rs.168000
Salaries = Rs. 20000
Other expenses = Rs. 11000
September
Sales = Rs. 260000
Purchases = Rs. 520000
Salaries = Rs. 74000
Other expenses = Rs. 16000
October
Sales = Rs. 160000
Purchases = Rs. 304000
Salaries = Rs. 56000
Other expenses = Rs. 12000
November
Sales = Rs. 232000
Purchases = Rs. 412000
Salaries = Rs. 50000
Other expenses = Rs. 24000
December
Sales = Rs. 172000
Purchases = Rs. 320000
Salaries = Rs. 56000
Other expenses = Rs. 12000
Additional Information:
Sales: 40% realized in the month of sales, discount on sales 3% in the same month. Balance realized equally in two subsequent months by calculating on gross sales.
Accounts receivable consists of Rs. 100000, company receives 60% in October, and balance received equally in last two months.
Company paid against Purchases in the month following the month of purchases. 30% of the salaries paid in the month of occurrence and remaining is paid in following month. Other expenses paid in the month of occurrence.
Rent: Rs 1,000 per month paid quarterly in advance in current year during the month of December.
Income-tax; Installment of advance tax of next year Rs 35,000 due on 15th December. Cash in hand: Rs 5,000 on September 30. Company arranges financing in case of deficit, if deficit is below Rs. 200000, company takes loan from bank, if more than Rs. 200000, company issues shares. Loan installment is due during November at Rs. 8000.