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6000 517 paid in the next month 2000 2000 3000 Total Factory expenses paid 8000 11000 12000 during the month Note : / month time lag or outstanding, it means to be paid in the next month to paid in the same month. HI) Estimation of Administrative Expenses (O/S % month) Particulars Dec Jan Feb March Administrative Expenses 10000 10000 5000 5000 paid in the same month 5000 5000 2500 2500 % paid in the next month 5000 5000 2500 Total Administrative expenses 5000 10000 7500 5000 paid during the month Note : % month time lag or outstanding, it means to be paid in the same month and % to paid in the next month. Illustration 3 : The following are the estimated sales of a company for 8 months ending in 31.08.2011 Month Estimated Sales (in units) January 2011 6000 February 2011 6500 March 2011 4500 April 2011 4000 May 2011 5000 June 2011 6000 July 2011 7000 August 2011 6000 As a matter of policy, the company the closing balance of finished goods and raw materials as follows. Stock items closing Balance of a month finished goods - 50% of the estimated sales for the next month. Raw Material - Estimated consumption for the next month. Each unit of production requires 2 kgs of Raw Materials costing 25 per kgs. Prepare production budget in units) and Raw material purchase budget (in unit and cost) of the company for the half year ending on 30.06.2011

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