Prepare a cash budget for the Kamp Manufacturing Company for three months of May, June and July. The company has a policy of maintaining a minimum cash balance of  Rs 30,000. The company’s cash balance as on 30 April is  Rs 30,000.

                 Actual Sales (Rs)           Estimated Sales (Rs)

January              75,500         May              105,000

February            75,000         June              120,000

March                90,000         July               150,000

April                  90,000         August          150,000

        Consider the following additional information:

        (a)   Cash sales are 60 per cent of the total sales. The remaining sales are collected equally during the following two months.

        (b)   Cost of goods manufactured is 75 per cent of sales. 80 per  cent of this cost is paid after one month and the balance is paid after two months of the cost incurrence.

        (c)   Fixed operating expenses are Rs 15,000 per month. Variable operating expenses are 10 per cent of sales each month.

        (d)   Half yearly interest on 12% Rs 450,000 debentures is paid during July.

        (e)   Rs 60,000 are expected to be invested in fixed assets  during June.

        (f)    An advance tax of Rs 15,000 will be paid in July.

                You are also required to determine whether or not borrowing will be necessary during the period and if yes, when and for how much.

 

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