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

(a)[1]

Calculate the number of units expected to be held in inventory on 31 May.

(b)[7]

Calculate the total amount shown in the cash budget for March that is spent on items other than 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 stay unchanged.

(c(ii))[3]

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

(d(i))[2]

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

(d(ii))[3]

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

(e)[7]

Advise Terri whether she should go ahead with option 1, option 2 or both. Justify your answer.

Budgeting and budgetary control — practice question