i) Budgetary slack is a limiting factor that restricts further production
Principal budget factor- Main components which have to be budgeted for. They are the most
important cost or resources that have to be budgeted for i.e. gives the first priority
ii) Pudding the budget -This is the process of making few adjustments or correction to the original
budget where the original budget is not attainable or has mistakes
Rolling budget –This is the process of preparing a budget based on the previous period budget
In this process we make the estimated charges in revenues and cost on the previous period budget to
give us the current period budget
marto answered the question on February 26, 2019 at 05:26
- Dream Wheels limited is in the process of reviewing its master budget for the six months ending 31
December 2009
The statement of financial position for the...(Solved)
Dream Wheels limited is in the process of reviewing its master budget for the six months ending 31
December 2009
The statement of financial position for the year ended 30 June 2009 is as follows:-
Additional information
1. The selling price from May 2009 to September 2009 was sh. 6,000 per unit. The price
increased to sh. 8,000 per unit from October 2009
2. 50% of sales are paid in cash and 50% are sold on credit
3. Credit sales are paid two months after the month of sale
4. Purchase are paid two months after the month of purchase
5. Wages and salaries are paid 75% in the month in which they are incurred and 25% in the
following month
6. Overheads are paid one month in arrears
7. Fixed assets worth shs. 30 million were purchased during the month of October 2009. The
amount is to be paid in three equal monthly installments commencing January every year.
8. Depreciation on fixed assets is at the rate of 10% per annum on a straight line basis. A full
year's depreciation is provided for fixed assets owned as at 31 December every year.
9. Shares worth sh. 20 million were issued through the stock exchange during the month of
September 2009
10. The value of closing stock as at 1 July 2009 was equal to the previous purchases
11. Dividends worth sh. 10 million relating to year 2009 will be paid to shareholders during the
month of December 2009
Required:
Revised cash budget for six months period ending 31 December 2009
Date posted: February 26, 2019. Answers (1)
- Highlight six requirements for the efficient operation of a budgetary control system.(Solved)
Highlight six requirements for the efficient operation of a budgetary control system.
Date posted: February 25, 2019. Answers (1)
- Kimani and Otieno who are in partnership, wish to prepare a budget for material requirements.
They have requested for your assistance and presented the following information:
1....(Solved)
Kimani and Otieno who are in partnership, wish to prepare a budget for material requirements.
They have requested for your assistance and presented the following information:
1. Sales budget for the five months from June 2011 to October 2011 is as follows
2. Finished goods at the end of the month are to be maintained at 25% of sales estimate for the
following month
3. 2,700 units of finished goods were available at the beginning of june 201
4. There is no closing work in progress (WIP) in any month
5. Each unit requires 5 kilograms of material 'Q and 4 kilograms of material 'P
6. Materials at the end of every month are to be maintained at half of the requirements for the
following month
Required:
i) Production budget for the month of June, August and September 2011
ii) Material 'P' usage budget for the month of June, July and August 2011
iii) Material 'Q' usage budget for the month of June and August 2011
Date posted: February 25, 2019. Answers (1)
- Describe the following terminologies in relation to preparations of a budget
i) Budget period
ii) Budget committee
iii) Budget manual(Solved)
Describe the following terminologies in relation to preparations of a budget
i) Budget period
ii) Budget committee
iii) Budget manual
Date posted: February 25, 2019. Answers (1)
- Bright Retailers Ltd. operates a budgetary control system. The following is the company's profit
forecast for the six months period ending 31 March 2012:(Solved)
Bright Retailers Ltd. operates a budgetary control system. The following is the company's profit
forecast for the six months period ending 31 March 2012:
Additional information:
1. 25%, of the sales are on cash basis. The balance is receivable three months after the month of
sale.
2. A generator worth Sh.600,000 was procured in September 2011. The supplier would install and
test the generator for three months whereas the payment will be made in January 2012.
3. Payment for raw materials is made to suppliers two months after delivery.
4. A dividend of Sh.900,000 will be paid in December 2011.
5. Rent for three months is payable in advance on the first day of each quarter.
6. Advertising expenses are paid three months in arrears.
7. 75% of the wages are paid in the month they are incurred with the balance being paid in the
following month.
8. The company's cost accountant estimates the closing cash balance for the quarter ending
December 2011 to be Sh.1 million.
Required:
A cash budget for the quarter ending 31 March 2012
Date posted: February 25, 2019. Answers (1)
- Explain five factors to consider when preparing a sales forecast for a cash budget.(Solved)
Explain five factors to consider when preparing a sales forecast for a cash budget.
Date posted: February 22, 2019. Answers (1)
- Distinguish between the following sets of terms:
ii) Fixed budget and flexible budget.(Solved)
Distinguish between the following sets of terms:
ii) Fixed budget and flexible budget.
Date posted: February 22, 2019. Answers (1)
- Kilim Ltd manufactures and sells a single product. The financial year of the company ends on 31
December every year. The following data have been collected...(Solved)
Kilim Ltd manufactures and sells a single product. The financial year of the company ends on 31
December every year. The following data have been collected for use in preparing the company's
quarterly budgets for the financial year ending 31 December 2013.
4. At the end of each quarter, closing stocks of finished goods are expected to be 10% of the
next quarter's sales requirement.
5. The closing stock of raw materials is expected to be higher than the opening stock by 10%.
6. Sales for the quarter ending 31 March 2011 A ate expected to be 36,000 units.
7. As from 1 July 2013, the selling price per unit is expected to increase by 10% from the
current price of Sh 600.
Required;-
i) Sales budget in value for each quarter.
ii) Production budget for each quarter.
iii) Material usage budget in units for each quarter
iv) Materials purchase budget for the year in units and value.
Date posted: February 22, 2019. Answers (1)
- Outline three differences between budgets and standards.(Solved)
Outline three differences between budgets and standards.
Date posted: February 22, 2019. Answers (1)
- Kazuri Furniture manufactures a single product branded 'sofa'. The following were the budgeted
costs at different levels of output for the year ended 31 December 2013:(Solved)
Kazuri Furniture manufactures a single product branded 'sofa'. The following were the budgeted
costs at different levels of output for the year ended 31 December 2013:
Date posted: February 22, 2019. Answers (1)
- Foper Ltd. currently operates a 'top-down' budgeting system where senior managers impose
budgets on departmental managers.
The company is now considering allowing departmental managers to participate in...(Solved)
Foper Ltd. currently operates a 'top-down' budgeting system where senior managers impose
budgets on departmental managers.
The company is now considering allowing departmental managers to participate in the setting of
their own budgets.
Required:
Argue the case for and against the participation of departmental managers in the preparation of their
budgets.
Date posted: February 22, 2019. Answers (1)
- Outline three advantages of flexible budgets over static budgets as tools for planning and
control.(Solved)
Outline three advantages of flexible budgets over static budgets as tools for planning and
control.
Date posted: February 22, 2019. Answers (1)
- Differentiate between the following types of budgets
i) Functional budget and master budget.
ii) Rolling budget and incremental budget.(Solved)
Differentiate between the following types of budgets
i) Functional budget and master budget.
ii) Rolling budget and incremental budget.
Date posted: February 22, 2019. Answers (1)
- XYZ Ltd. Carries on its business in Nairobi. The company has been reporting its profits using
absorption costing system. During the financial year ended 30 September...(Solved)
XYZ Ltd. Carries on its business in Nairobi. The company has been reporting its profits using
absorption costing system. During the financial year ended 30 September 2005, the following
summary statement was provided:
Date posted: February 22, 2019. Answers (1)
- Jogi Transporters operate in the transport industry. On 1 December 2005, the management
acquired a new lorry to meet customer needs and cater for the increase...(Solved)
Jogi Transporters operate in the transport industry. On 1 December 2005, the management
acquired a new lorry to meet customer needs and cater for the increase in business volume.
The following information relates to the initial and maintenance cost of the lorry.
Additional information:
1. The lorry has an economic life of 4 years.
2. The lorry has 6 tyres after each costing Sh.8000
3. Service is carried out after every 5,000 kilometres.
4. On average the lorry covers 20 kilometres per litre of fuel consumed.
5. The lorry is projected to cover 100,000 kilometres in January 2006, 25,000 kilometres in
Required:
Prepare a schedule for the three months showing
i. Variable costs per kilometer
ii. Fixed costs per kilometer
iii. Total costs per kilometer
c) Fixed costs are actually variable cost
With reference to (b) above explain whether you agree or disagree with the statement.
February 2006 and 50,000 kilometres in March 2006.
Date posted: February 22, 2019. Answers (1)
- Briefly explain the following terms as used in cost accounting:
i. Mixed costs
ii. Cost behaviour
iii. Incremental cost(Solved)
Briefly explain the following terms as used in cost accounting:
i. Mixed costs
ii. Cost behaviour
iii. Incremental cost
Date posted: February 22, 2019. Answers (1)
- Happy Holidays Resort operates a leisure complex in Watamu Town. The company offers a
variety of facilities among which are sporting, accommodation, a shopping centre and...(Solved)
Happy Holidays Resort operates a leisure complex in Watamu Town. The company offers a
variety of facilities among which are sporting, accommodation, a shopping centre and a
restaurant.
The accountant of the resort is preparing a budget for the busy season which lasts for twenty
weeks. Eight weeks out of the twenty are considered to be peak period.
The accommodation facility comprises 80 single rooms and 40 double rooms. The prices charged
for double rooms are 150% of the single room rate
The following forecasts have been made:
1 Accommodation facility : Daily variable costs will be Sh.500 for single room
and Sh.700 for double room.
: Fixed costs will be Sh.1, 700,000.
2 Sporting facility : Resident charges will be Sh.200 per person per day.
:Casual customers will be charged Sh.500 per day, for
use of this facility
3 Restaurant facility :This facility will generate an average contribution of
Sh.300 per person per day
: Fixed cost will be Sh.2, 500,000.
4 Shopping centre facility : This facility will generate a contribution of
Sh.2,000,000.
5 Bookings : All rooms are booked for the peak season. For the
remainder of the busy season occupancy is expected to
be 60% for double rooms 70% for single rooms.
: On average, there will be 50 casual customers per
day. All customers are assumed to dine at the restaurant
and use the sports facility.
The resort's policy is that only two people can occupy a double room.
Required:
(i). Break – even rate per single room and double room.
(ii). If a profit of Sh.10 million is budgeted for on the accommodation facility alone, compute the
required rate per single and per double room.
(iii). If the leisure complex aims at earning Sh.10 million on accommodation, prepare the budgeted
complex statement for the complex
Date posted: February 22, 2019. Answers (1)
- State the limitations of break – even analysis.(Solved)
State the limitations of break – even analysis.
Date posted: February 22, 2019. Answers (1)
- State the methods that a company can use to determine the break-even point or the output needed
to achieve a target operating income.(Solved)
State the methods that a company can use to determine the break-even point or the output needed
to achieve a target operating income.
Date posted: February 22, 2019. Answers (1)
- Urembo Ltd. Produces and sell a wide range of homecare detergents. Currently the company has
sufficient spare capacity to undertake additional contracts.
Additional information:
1. The company absorbs...(Solved)
Urembo Ltd. Produces and sell a wide range of homecare detergents. Currently the company has
sufficient spare capacity to undertake additional contracts.
Additional information:
1. The company absorbs production overhead using a rate of 200% on direct wages. The rate is
derived from the following budgeted figures:
Sh.
3. Urembo Ltd has a purchase order to supply Watalii Restaurant with 4,000 units of ,fresh'
beauty soap at Sh.32 each.
4. If the purchase order is accepted the normal budgeted sales of Urembo Ltd. Would be
affected adversely.
Required:
(i). Advise the management of urembo Ltd on whether to accept the purchase order from
Watalii Restaurant
(ii). Explain the principles that you have applied in arriving at the conclusion in (b) (i) above.
Date posted: February 22, 2019. Answers (1)