Assignment -2

1. Explain the concept of Break-Even-Analysis and indicate how it is applied in marginal

costing.
2. What is ratio analysis? What are the features of ratio analysis? Enumerate the different
ratios used in the financial statement analysis.

3. Prepare a cash budget for the Months of May, June , July 2014 on the basis of the
following information.
(i) Income Expenditure forecasts
Months

Credit sales

March
April
May
June
July
August

60,000
62,000
65,000
58,000
56,000
34,000

Credit
Purchases
36,000,
8,000
33,000
35,000
39,000
8,000

Wages
9,000
3,000
10,000
8,500
9,500
3,000

Manufact.
Expenses
4,000
1,500
4,500
3,500
4,000
1,500

Office
expenses
2,000
1,500
2,500
2,000
1,000
1,500

Selling
expenses
4,000
4,000
4,500
3,500
4,500
4,500

ii) Cash balance on 1st May 2014 and Rs. 8,000

iii) Plant costing Rs. 16,000 is due for delivery in july, payable 10% on delivery and the balance
after 3 months.
iv) Advance Tax of Rs. 8,000 each is payable in March and June
v) Period of credit allowed (1) by suppliers-two months, and (2) to customers-one month
v) Lag in payment of manufacturing 1\2 month
vi) Lag in payment of office and selling expenses one month.
4.