1) Using the information above, prepare the master budget for handbags only for the quarter ending 30th September 2017.

2) Outline the advantages and disadvantages of traditional budgeting and advise the company on whether they should consider implementing the balanced scorecard system.

Financial Information Wallets SAR 1,000.00 SAR 500.00 SAR 1,500.00 Handbags Suitcases Selling Price per unit Direct Materials (leather) cost per meter SAR 430.00 Meters of materials(leather) required per unit 2 Direct Labour hour cost per unit Sales commission per item sold Variable manufacturing overhead per unit SAR 15.00 Number of labour hours per unit Budgeted sales in units SAR 230.00 SAR 500.00 3 SAR 30.00 SAR 10.00 SAR 15.00 SAR 5.00 SAR 10.00 SAR 32.00 SAR 13.00 SAR 17.00 2 240 3 100 270 a) Other costs Production manager annual salary SAR 60,000 Annual marketing costs General Expenses Annual Fixed manufacturing overhead (excluding depreciation) SAR7,000 (20% relates to handbags) SAR 12,000 SAR 5,000 b) The company bought specialised equipment 5 years ago which cost SAR120,000. The useful life of this equipment is 10 years. Depreciation is allocated to manufacturing overhead expenses c) The company had 3 handbags and 10 meters of leather in stock at the end of June d) Company policy is to maintain 25% of the following months sales level as closing inventory for finished goods e) Company policy to maintain 25% of next months production needs as closing inventory for direct materials f) Budgeted sales of handbags for the next six months are as follows July August 20 September October November December 36 60 20 20 20 g) Cash collections on sales are as follows 60% in the month of sale 40% in the month following sale Receivables at the end of June were SAR 3,000 h) Cash payments on purchases are as follows 55% in the month of purchase 45% in the following month Payables at the end of June were SAR 5,000 The closing cash balance in June 2016 was SAR 40,000 and it is company policy to maintain cash at this level at the end of each month. i)