Alya Sdn Bhd. manufactures and supplies granite pots and pans with glass lids to a company in Japan. The new manager, Rushdi, wants to monitor the quarterly budgets for the quarter ending 30th September 2021 to ensure the sales targeted can be executed as planned even with the current economic condition. The following information is available: Budgeted sales: POTS 60,000 units @RM100 each PANS 40,000 units @RM125 each Budgeted inventories: Beginning Ending Pots Pans Direct material (Granite) Direct material (Glass) Direct material (Handles) 20,000 8,000 32,000 kg 29,000 kg 6,000 units 25,000 10,000 36,000 kg 32,000 kg 7,000 units Standard variable costs: POTS PANS Direct materials: Granite Glass Handles Total materials 5kg @RM8.00 3kg@RM5.00 1 @RM3.00 RM40.00 15.00 3.00 58.00 4kg @RM8.00 3kg@RM5.00 RM32.00 15.00 47.00 Direct labour Variable manufacturing overhead Total 2hours@RM12.00 2hours@RM1.50 24.00 3.00 85.00 3hours@RM16.00 3hours@RM1.50 48.00 4.50 99.50 Variable manufacturing overhead cost is RM384,000, while fixed factory overhead is RM214,000 per quarter (including the non-cash expenditure of RM156,000) and is allocated on total units produced. Financial information follows: • Beginning cash balance is RM1,800,000 • Sales are on credit and are collected 50 percent in the current period and the remainder in the next period. Last quarter’s sales were RM8,400,000. There are no bad debts. • Purchases of direct materials and labor costs are paid for in the quarter acquired. • Manufacturing overhead expenses are paid in the quarter incurred. • Selling and administrative expenses are all fixed and are paid in the quarter incurred. They are budgeted at RM340,000 per quarter, including RM90,000 of depreciation. Required: For the quarter ending 30th September 2021, prepare the following: a) Sales budget. b) Production budget in units. c) Direct materials usage and purchase budget (Granite, Glass & Handles).
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Alya Sdn Bhd. manufactures and supplies granite pots and pans with glass lids to a company in Japan. The new manager, Rushdi, wants to monitor the quarterly budgets for the quarter ending 30th September 2021 to ensure the sales targeted can be executed as planned even with the current economic condition. The following information is available:
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Budgeted sales:
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POTS 60,000 units @RM100 each
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PANS 40,000 units @RM125 each
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Budgeted inventories: |
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Beginning |
Ending |
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Pots Pans Direct material (Granite) Direct material (Glass) Direct material (Handles) |
20,000 8,000 32,000 kg 29,000 kg 6,000 units |
25,000 10,000 36,000 kg 32,000 kg 7,000 units |
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POTS |
PANS |
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Direct materials: Granite Glass Handles Total materials |
5kg @RM8.00 3kg@RM5.00 1 @RM3.00 |
RM40.00 15.00 3.00 58.00 |
4kg @RM8.00 3kg@RM5.00
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RM32.00 15.00
47.00 |
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Direct labour Variable manufacturing Total |
2hours@RM12.00
2hours@RM1.50 |
24.00
3.00 85.00 |
3hours@RM16.00
3hours@RM1.50 |
48.00
4.50 99.50 |
Variable
Financial information follows:
• Beginning cash balance is RM1,800,000
• Sales are on credit and are collected 50 percent in the current period and the remainder in the next period. Last quarter’s sales were RM8,400,000. There are no
• Purchases of direct materials and labor costs are paid for in the quarter acquired.
• Manufacturing overhead expenses are paid in the quarter incurred.
• Selling and administrative expenses are all fixed and are paid in the quarter incurred. They are budgeted at RM340,000 per quarter, including RM90,000 of
Required:
For the quarter ending 30th September 2021, prepare the following:
a) Sales budget.
b) Production budget in units.
c) Direct materials usage and purchase budget (Granite, Glass & Handles).
d) Direct labor budget.
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