ABC ltd is preparing budget for the four months commencing 1^st January 2019. The company makes and sells a single product. The details of the product are as follows:

Selling price Sh 400 per unit

Direct material Sh 50 per unit

Direct Labour Sh 100 per unit

variable overhead Sh 60 per unit

The following information is also available:

	Nov	Dec	Jan	Feb	Mar	Apr
Sales(units)	1300	1500	1700	1500	1800	1800
Production(Units)	1400	1500	1800	2000	2200	2200

Additional information:

i) Fixed overhead is budgeted at Sh 70,000 per month including depreciation of Sh 10,000.

ii) Wages are paid 75% during the month in which they are earned and the rest the month following.

iii) Variable overheads are paid in the month in which they are incurred.

iv) Material costs are paid two months after the material is used in production.

v) There is a tax liability of Sh 140,000 to be settled in February.

vi) The company will purchase a new machine for sh 200,000 in January. The present machine will be sold for Sh 30,000 receivable in March.

vii) 5% of the monthly sales are for cash. The remainder will be sold on credit with the debtors settling one month after the sales.

viii) The cash balance on 1^st January 2019 is expected to be Sh 10,000.

Required:

i) Prepare a cash budget for the four months commencing on 1st January 2019

ii) Explain FOUR roles of the budgetary process in an organization

ABC ltd is preparing budget for the four months commencing 1^st January 2019. The company makes and sells a single product. The details of the product are as follows:

Selling price Sh 400 per unit

Direct material Sh 50 per unit

Direct Labour Sh 100 per unit

variable overhead Sh 60 per unit

The following information is also available:

	Nov	Dec	Jan	Feb	Mar	Apr
Sales(units)	1300	1500	1700	1500	1800	1800
Production(Units)	1400	1500	1800	2000	2200	2200

Additional information:

i) Fixed overhead is budgeted at Sh 70,000 per month including depreciation of Sh 10,000.

ii) Wages are paid 75% during the month in which they are earned and the rest the month following.

iii) Variable overheads are paid in the month in which they are incurred.

iv) Material costs are paid two months after the material is used in production.

v) There is a tax liability of Sh 140,000 to be settled in February.

vi) The company will purchase a new machine for sh 200,000 in January. The present machine will be sold for Sh 30,000 receivable in March.

vii) 5% of the monthly sales are for cash. The remainder will be sold on credit with the debtors settling one month after the sales.

viii) The cash balance on 1^st January 2019 is expected to be Sh 10,000.

Required:

i) Prepare a cash budget for the four months commencing on 1st January 2019

ii) Explain FOUR roles of the budgetary process in an organization