Question

Section B - Please answer ALL questions. Question 1 Dudley Manufacturing is preparing its master budget for the first month of the upcoming year. The following data pertain to Far East Manufacturing's operations: • Account Balances as at December 31(prior year): Cash RM4,500 * Account Receivable, net RM50,000 Inventory RM15,000 Account Payable RM42,400 Actual sales in December were RM70,000. Selling price per unit is projected to remain stable at RM10 per unit throughout the budget period. Sales for the first two months of the upcoming year are budgeted to be as follows: January RM83.000 February RM92,000 - Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. Far East Manufacturing has a policy that states that each month's ending inventory of finished goods should be 25% of the following month's sales in units). Of each month's direct material purchase, 10% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at RM2 per pound. Ending inventory of direct materials should be 10% of next month's production needs. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hour per unit is 0.02. The direct labor rate per hour is RM10 per hour. All direct labor is paid for in the month in which the work is performed Monthly manufacturing overhead costs are RM8,000 and RM1.20 per unit produced for variable manufacturing overhead. Depreciation is included in these figures. All expenses are paid in the month in which they are incurred. Depreciation on the factory equipment and building is budgeted to be RM600 per month. Computer equipment for the administrative offices will be purchased in the upcoming month. In January, Far East Manufacturing will purchase equipment for RM6,200 (cash) Operating expenses are budgeted to be RM per unit sold plus fixed operating expenses of RM2,000 per month. All operating expenses are paid in the month in which they are incurred. Depreciation is excluded in these figures. Depreciation on the building and equipment for the general and administrative offices is budgeted to be RM500 per month, which includes depreciation on new acquisitions.

Answer 1

fou Tancaly's Janual Cash Schedule colle coron (a) PM 10,000 Decembee Sales Cash Colected in December for December Sales EM T0,000 x 30'/, =M 21,000. January for Decomber Sales RM 10,000x 70 %, RM 49,000 . Cash Collected in Janualy Budgekd Sales Cash colle ched in Jonuary gor January sales RM 83.000 . RM 83000 x 30%. &M 24,900 . for Januany .'. Total Collection RM 49000 + RM 24,900 &M 13,900. Cash De ACLounts Receinable as 31-129 N కాం,000 on %3D Colle ction for January .'. Total Cash LM 50,000 + RM 24,900 RM 74,900.

Production (b) Fove castedBales for Janualy RM 83,000 Fore cauted Inreusony Claing RM 92,000 x 25%. - RM 23, 000 . balance balance - RM Opening Theurory 15, 000 0 Januany i Producrion Januany budger gor Sales clesing ATiveurony for cast Tnventory. Fore cast forecast Opening RM 83,000 &MIS,000 + RM 23,o00 4M 91,000. Production budget RM 91 000 RM 10 in Units 9100: Uwits.

Pusichases Budger for Jawuany - Matenal Douct (e) faw 'Matrial tquired tor Production 9100 Mnits x 2°Pounds Per unit x RM2 RM 361H0D Plamued cheing ieutor oalanu produerion budget gor februany RM23P00 RM 92,000 21 RM 69,000 RM 69,000 RMI0 6,900 Uwits. lawi Marenias Imveutony for = 6,9 00 Uwts x 2 Pounds 1380 Uwits cheing Januany X 10% 1,300 luits RM 2 eM 2,760 . pel pound Raw Marerial In veutony gor January Opening - NIL. Dirnct Marerias Purehase Budger tor Poodu ction + Dinect Materiap RM 361400 + RM2,760 EEM 39,160 Material. Requi red D dect Marercal - Opeiing tleing miteh

Cash dis bursements (d) for all Jahuany- प्रण कनककतिषं Cash Direct Mareial Purchase * 101:) + paymeut for •(RM 39,16ó RM 46,316 . RM 42,400 %3D Dueer Cash fayment for Laber o per uwit x RM 10 9,100 units X 0.02 W %3D pe. RM 1,820 firced Mauefachuing Cash paymout foY RM 8,000 Orer head pepreciation RM 600 %3D RM 8000 E RM 1, 400 Cash paymint or variabe Manufachuning Orechead 9,100 Unts RM I:20 * RM 10,920. cash paymnt for equipmeur puiLhase = RM 61200 Cash paymentor Fixed Operating Expense RM 2,000 payment r Vaiabu Operasting Expense X RM I Cash 8,300 wits per unit * RM 8,300 ,