Question 1) Answer all the questions:
1) Briefly explain budget. Write down the difference between budgeting and budget.
2) What is production budget? Why it is prepared.
3) Describe the importance of cash budget.
4) Explain the major objectives of budgeting control.
5) Describe the meaning of product mix.
Question 2) What do you understand by business forecasting? Describe its importance and limitation.
Question 3) What do you understand by zero base budgeting? Explain its essential features. How it differs from traditional budgeting.
Question 4) From the following information prepare cash budget for the quarter April to June:
Months Sales Purchase Wages Factory Overhead Office Overhead
Jan 90,000 40,000 9,000 5,000 7,000
Feb 1,00,000 50,000 10,000 5,000 7,000
March 1,10,000 55,000 11,000 5,500 7,500
April 1,20,000 60,000 12,000 6,000 8,000
May 1,30,000 65,000 13,000 6,500 8,500
June 1,40,000 70,000 14,000 7,000 9,000
ADDITIONAL INFORMATION:
a) Expected cash balance on 1st April is 11,000.
b) 40% of total sales will be in cash . 75% of credit sales would be realized after one month of the sales and rest after two months.
c) Purchase would always be made for cash to avail cash discount @8%.
d) Wages will be paid after an interval of 15 days on 1st and 16th of each month.
e) Factory overheads would be paid after an interval of month.