Q# 1 HASF Inc a distributor of cosmetics throughout Karachi, is in the process of assembling a

cash budget for the first quarter 2015 the following information has been extracted from the
company s’ accounting records

1. All sales divided in equal part between cash and credit sales. 55 % of credit sales are
collected in the month of sales 40% are collected in the following month. Management
believes that only 20% of the a/c receivable outstanding on December 2014 will be
recovered that the recovery will be in January 2015
2. 60% of Purchase are paid for in the month of purchase the remaining 40% are paid for in
the month after acquisition
3. The December 31 2014 balance sheet disclosed the following selected figures cash
20,000 a/c receivable 55,000 and a/c payable 22,000
4. Company Maintains a 20,000 minimum cash balance at all time. Financing is available in
1,000 multiples at an 8% interest rate interest is paid ate the time of repaying principle.
5. Additional date
Jan Feb March

Sales 150,000 180,000 185,000

Purchases 90,000 100,000 140,000

Cash operating cost 31,000 24,000 45,000

Proceeds from the sales of equipment - 5,000

Required

1. Prepare a schedule of cash collection for Jan through March

2. Prepare a schedule of cash disbursement for Jan through March
3. Prepare a cash budget for Jan through March with the help of above information
4. Income statement for the period Jan to March

Q#2
HASF company Manufactured 1,000 units of product last year and identified the following cost
associated with the manufacturing activity

Direct material used 35,200

Direct labor 66,500
Supervisory Salary 31,100
indirect material and supplies 8,000
plant utilities (other than power to run plant equipment 9,600
Power to run plant equipment 7,100
Depreciation on plant and equipment 4,800
Property taxes on building 6,500

Required
unit variable costs and total fixed costs are expected to remain unchanged next year calculate the
unit cost and total cost if 1,400 units are produced next year (05 marks )

Q#3
The following information appears in HASF records for last year

Administrative cost 80,000

Manufacturing building depreciation 14,000
Indirect materials and supplies 17,600
Sales commissions 30,400
Raw material inventory Jan 1 36,800
Direct labor 91,200
Raw material inventory Dec 31 38,000
Finished goods inventory January 1 71,800
Finished goods inventory Dec 31 48,000
Raw material purchases 44,600
Work in process Dec 31 26,200
Supervisory and indirect labor 28,800
Property taxes manufacturing plant 16,800
Plant utilities and power 47,000
Work in process Jan -1 30,800
Sales Revenue 420,800

Prepare an income statement with a supporting schedule of cost of goods sold

Q4 prepared the following budgets

 Sales budgets
 Production budgets
 Raw material purchase budget
 Direct labor cost budgets
 Cash receipts budgets
Assumption

Sales budgets

1. First quarter budgeted sales 10000 units First that Increase 10% in 2 nd quarter & third
quarter , in fourth quarter 10,000 units
2. Per units prices in Each quarter 1,000

Production budgets
 1. There is no beginning inventory in first quarter
2. Inventory at the end of the year equal to 40% of the total units sold

Raw material Purchase Budget

1. One unit of finished product requires 2 units of raw material

2. 5,000 units of beginning inventory in first quarter
3. Inventory at the end of the year equal to 36% of total units produce
4. Per units price of raw material 50

Direct labor cost budget

1. 2 hours required for one finished units

2. Per hour rate 100

Cash collection budgets

1. 50 % collected in the first quarter 30% in 2nd 15% in third 5% in fourth quarter
2. Half of each quarter sales are on accounts

Q#5 budget schedules: the following data apply to the HASF Hardware Store and its 2011
budget

Forecast Sales
Jan $100,000
Feb $60,000
Mar $80,000
Apr $90,000

Balance Sheet Data

December 31,2010
cash $8,000
Account receivable:
November sales 16000
December sales 50000
Inventory 54000
Account payable(merchandise) 27000

Other data are as follows:

 Sales are on credit with 50% of sales collected in the same month after sale ,40% in
the second month after sale
  Cost of goods sold is 75% of sales
 Other variables costs are 20% of sales paid in the month incurred
 Inventories are to be 90% of next month’s budgeted sales requirements
 Fixed expenses are $5000 per month; all require cash
 Credit time period for purchases are 30 days

Required:
1. prepare budget of purchase for each of the first three months of 2011
2. prepare separate budgets of cash receipts and disbursements and cash budget
for each of the first three months of 2011
3. prepare a budget income statement for the first quarter of 2011

Q#6
A Hotel pays the phone company 500 per month plus .25 for each call made during January
6,000 calls were made in February 5,000 calls were made
Required
1. Calculate the hotel s’ phone bill for January and February
2. Calculate the cost per phone call in January and in February
3. Separate the January phone bill into its fixed and variable components
4. What was the average cost of a phone call in January (02 marks)