Budgeting and budgetary control — Accounting 9706 AS & A Level Question & Worked Solution

(a)[1]

Calculate how many units are expected to be held in inventory at 31 May.

(b)[7]

Calculate the total figure recorded in March in the cash budget for expenditure, excluding payments to suppliers.

(c(i))[2]

Calculate the effect that option 1 would have on Terri’s overdraft at the end of April, assuming that purchases do not change.

(c(ii))[3]

Calculate the effect that option 1 would have on Terri’s overdraft at the end of May, assuming purchases remain unchanged.

(d(i))[2]

Calculate the effect that option 2 would have on Terri’s overdraft at the end of April, assuming sales do not change.

(d(ii))[3]

Calculate the effect that option 2 would have on Terri’s overdraft at the end of May, assuming sales stay unchanged.

(e)[7]

Advise Terri on whether she should choose option 1, option 2 or both. Support your answer.

Budgeting and budgetary control — practice question