(a) What is meant by the terms: (i) Budget (ii) Operating budget (iii) Master budget? (b) The...

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(a) What is meant by the terms:

(i) Budget

(ii) Operating budget

(iii) Master budget?

(b) The information below relates to the business of Madingley Ltd:

The following is a schedule of the budgeted income and expenditure for the six months ended 30 November 20X0 (£000):

Notes:

(i) Generally, materials are paid for two months after receipt, and customers pay on average after three months.

(ii) Payments outstanding for materials at 1 June 20X0 were: April £38,500; May £43,700.

(iii) Debtors were: March £194,300; April £203,600; May £196,500.

(iv) Wages are to be paid in the month in which they fall due.

(v) Overheads are to be paid one month after they are incurred: the figure for May was £127,400.

(vi) Stocks of raw materials are to be kept at £91,700.

(vii) The stocks of finished goods at 30 November 20X0 are to be £136,200.

(viii) There are no stocks of semi-finished items on 31 May 20X0, and none are expected in stock on 30 November.

(ix) Forty per cent of the overheads are to be considered as fixed.

(x) Depreciation on plant and machinery is to be allowed at 10 per cent per annum on cost; the fixtures and fittings are thought to have a value at 30 November of £980.

(xi) There are no sales of finished goods or purchases of raw materials for cash planned during the period.


Prepare:

(a) A forecast operating statement for the period June to November 20X0; and

(b) A forecast balance sheet as at 30 November 20X0.

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