. AMINA LTD. manufactures product X with the following details:

a) Per unit data:                                                         GHC

            Direct Materials                                              40

            Direct Labour                                                    8

            Variable Overheads                                          4

                                                                                    52

            Profit                                                               28

            Selling Price                                                   80

b) Fixed costs, amounting to GHC 10,000 per month are paid in the month in which they arise.

c) Customers settle their May accounts in July (two months later).

d) The company pays its suppliers of material two months after the purchase.

e) Production and sales units are as follows:

 

                                    May     Jun      Jly       Aug     Sep      Oct      Nov     Dec 

            Production      1,200   1,400   1,600   2,000   2,400   2,600   2,400   2,200

            Sales                1,000   1,200   1,400   1,600   1,800   2,000   2,000   2,600

f) Sufficient materials were to be purchased for each month’s production and all purchases and sales were to be on credit.

g) Wages were to be paid in the month of production.

h) Variable Overheads were to be paid 50% in the month of production; the balance in the following month.

i) Anew item of plant was to be bought and paid for in July at a cost of GHC6,000.

j) It is hoped an old plant will be sold in September  for GHC1,800.

k) The company’s opening bank balance is GHC2,500 in credit.

Required:

 Prepare a month by month Cash Budget for the second half of the year

Answer rating: 100% (QA)

Below given is the cash budget Cash Receipts July August Sep Oct Nov Dec Sa... View the full answer