USEFUL FOR CA, CS, CMA

A PUBLICATION BY RAHUL SHIKHA ACADEMY (RSA)

BUDGETARY CONTROL
Important Questions
(Must Do Before Exam)

CA RAHUL GARG
(TRG)
GOLD MEDALIST
ALL INDIA RANKHOLDER in CA CS CMA
Question 1
Following data is available for DKG and Co :
Standard working hours 8 hours per day of 5 days per week
Maximum capacity 50 employees
Actual working 40 employees
Actual hours expected to be worked per four week 6400 hours
Std. hours expected to be earned per four weeks 8,000 hours
Actual hours worked in the four- week period 6,000 hours
Standard hours earned in the four- week period 7,000 hours
The related period is of 4 weeks. In this period there was a one special day holiday due to
national event. Calculate the following ratios:
(1) Efficiency Ratio, (2) Activity Ratio, (3) Calendar Ratio, (4) Standard Capacity Usage Ratio,
(5) Actual Capacity Usage Ratio. (6) Actual Usage of Budgeted Capacity Ratio

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 2
For production of 10,000 units the following are budgeted expenses :
₹ Per unit
Direct Materials 48
Direct Labour 24
Variable Overheads 20
Fixed Overheads (₹ 1,20,000) 12
Variable Expenses (Direct) 4
Selling Expenses (10% fixed) 12
Administration Expenses (₹40,000 fixed) 4
Distribution Expenses (20% fixed) 4
Prepare a budget for production of 7,000 units and 9,000 units.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 3
Jigyasa Ltd. is drawing a production plan for its two products Minimax (MM) and Heavyhigh
(HH) for the year 2013-14. The company’s policy is to hold closing stock of finished goods at
25% of the anticipated volume of sales of the succeeding month. The following are the estimated
data for two products :
Minimax (MM) Heavyhigh (HH)
Budgeted Production units 1,80,000 1,20,000
Rs. Rs.
Direct material cost per unit 220 280
Direct labour cost per unit 130 120
Manufacturing overhead 4,00,000 5,00,000

The estimated units to be sold in the first four months of the year 2013-14 are as under :
April May June July
Minimax 8,000 10,000 12,000 16,000
Heavyhigh 6,000 8,000 9,000 14,000
Prepare production budget for the first quarter monthwise.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 4
Chunnu Ltd. has prepared the following Sales Budget for first 5 months of 2013 :
Sales (Units)
Jan 10,800
Feb 15,600
Mar 12,200
Apr 10,400
May 9,800
Inventory of finished goods at the end of every month is to be equal to 25% of the sales
estimate for the next month. On 1stJan, 2013 there were 2,700 units of product in hand.
Every unit of product requires two types of materials :
Material A : 4 Kg
Material B : 5 Kg
Materials equal to one half of the requirement of next month’s production are to be in hand at
the end of every month. It was also met on 1stJan, 2013.
Prepare the Production Budget and Material Purchase Budget.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 5
Concorde Ltd. manufactures two products using two types of materials and one grade of labour.
Shown below is an extract from the company’s working papers for the next month’s budget:
Product A Product B
Budgeted sales (in units) 2,400 3,600
Budgeted material consumption per unit (in kg):
Material - X 5 3
Material - Y 4 6
Standard labour hours allowed per unit of product 3 5
Material-X and Material-Y cost ₹ 4 and ₹ 6 per kg and labours are paid ₹ 25 per hour. Overtime
premium is 50% and is payable, if a worker works for more than 40 hours a week. There are 180
direct workers.
The target productivity ratio (or efficiency ratio) for the productive hours worked by the direct
workers in actually manufacturing the products is 80%.
In addition, the non- productive down-time is budgeted at 20% of the productive hours worked.
There are four 5-days weeks in the budgeted period and it is anticipated that sales and
production will occur evenly throughout the whole period.
It is anticipated that stock at the beginning of the period will be :
Product A 400 units
Product B 200 units
Material X 1,000 Kgs.
Material Y 500 Kgs.
The anticipated closing stocks for budget period are as below :
Product A 4 days sales
Product B 5 days sales
Material X 10 Days consumption
Material Y 6 Days consumption
Calculate the Material Purchase Budget and the Wages Budget for the direct workers, showing the
quantities and values, for the next month.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com