Indah Berhad is preparing its annual budgets for the year ended 31 December 2020. The company manufactures and sells one product, Product Anggun which has a selling price of RM250 per unit. The estimated sales demand for Product Anggun is given as below: Month January 400 units February 300 units March April Sales Demand 600 units 450 units It is the company's policy to hold stocks of finished goods at the end of each month equals to 50% of the following month's sales. At the end of the production process, it has been found that 10% of those units tested were to be faulty and it is not possible to rectify these faulty units. Anggun were manufactured using three different types of raw materials that are material RA, material RB and material RZ. The details of the product information is given as follows: Price per kg Material per unit 3 kgs 2 kgs 4 kgs Material RA RM3.50 Material RB RM5.00 Material RZ RM4.50 The raw material stocks are expected to be as follows on 1st January 2020. The stocks are to be increased by 20% in January, and then remain at their new level for the foreseeable future. RA RB RZ Stock at 1* Jan 2020 1000 kgs 400 kgs 600 kgs The labour is paid on an hourly rate based on attendance at RM8.00 per direct labour hour. Every unit of Anggun requires a total of 8 direct labour hour per unit. In addition to the unit direct labour hours mentioned above, 20% of the attendance time is spent on tasks which support the production activity. Required: а. Prepare the Sales Budget for each month of the first quarter 2020. b. Prepare the Production Budget from January to March 2020. с. Prepare the Direct Material Usage Budget from January to March 2020.
Indah Berhad is preparing its annual budgets for the year ended 31 December 2020. The company manufactures and sells one product, Product Anggun which has a selling price of RM250 per unit. The estimated sales demand for Product Anggun is given as below: Month January 400 units February 300 units March April Sales Demand 600 units 450 units It is the company's policy to hold stocks of finished goods at the end of each month equals to 50% of the following month's sales. At the end of the production process, it has been found that 10% of those units tested were to be faulty and it is not possible to rectify these faulty units. Anggun were manufactured using three different types of raw materials that are material RA, material RB and material RZ. The details of the product information is given as follows: Price per kg Material per unit 3 kgs 2 kgs 4 kgs Material RA RM3.50 Material RB RM5.00 Material RZ RM4.50 The raw material stocks are expected to be as follows on 1st January 2020. The stocks are to be increased by 20% in January, and then remain at their new level for the foreseeable future. RA RB RZ Stock at 1* Jan 2020 1000 kgs 400 kgs 600 kgs The labour is paid on an hourly rate based on attendance at RM8.00 per direct labour hour. Every unit of Anggun requires a total of 8 direct labour hour per unit. In addition to the unit direct labour hours mentioned above, 20% of the attendance time is spent on tasks which support the production activity. Required: а. Prepare the Sales Budget for each month of the first quarter 2020. b. Prepare the Production Budget from January to March 2020. с. Prepare the Direct Material Usage Budget from January to March 2020.
Cornerstones of Cost Management (Cornerstones Series)
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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.
Question
Transcribed Image Text:Indah Berhad is preparing its annual budgets for the year ended 31 December 2020. The
company manufactures and sells one product, Product Anggun which has a selling price of
RM250 per unit. The estimated sales demand for Product Anggun is given as below:
January
400 units
February
300 units
April
450 units
Month
March
Sales Demand
600 units
It is the company’s policy to hold stocks of finished goods at the end of each month equals to
50% of the following month's sales. At the end of the production process, it has been found
that 10% of those units tested were to be faulty and it is not possible to rectify these faulty
units.
Anggun were manufactured using three different types of raw materials that are material RA,
material RB and material RZ. The details of the product information is given as follows:
Price per kg
Material per unit
3 kgs
2 kgs
4 kgs
Material RA
RM3.50
Material RB
RM5.00
Material RZ
RM4.50
The raw material stocks are expected to be as follows on 1st January 2020. The stocks are to
be increased by 20% in January, and then remain at their new level for the foreseeable future.
RA
RB
RZ
Stock at 1st Jan 2020
1000 kgs
400 kgs
600 kgs
The labour is paid on an hourly rate based on attendance at RM8.00 per direct labour hour.
Every unit of Anggun requires a total of 8 direct labour hour per unit. In addition to the unit
direct labour hours mentioned above, 20% of the attendance time is spent on tasks which
support the production activity.
Required:
a.
Prepare the Sales Budget for each month of the first quarter 2020.
b.
Prepare the Production Budget from January to March 2020.
C.
Prepare the Direct Material Usage Budget from January to March 2020.
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