2. Indahreka Sdn Bhd manufactures two household products, Foldable Table and Flip Chair. As the accountant of Indahreka Sdn Bhd, you have been requested to assist in the preparation of company's operational budget for the third quarter of year 2020. The following data has been approved by the executives in the budget committee. Foldable Table Flip Chair Expected sales (units) 2,000 8,000 Selling price per unit (RM) 180 90 Additional information: 1. There are two types of material used in producing both products, wood and steel. Each unit of Foldable Table uses 4 metres of wood and 2 metres of steel and each unit of Flip Chair uses 2 metres of wood and 1 metre of steel. At the end of June 2020, 400 units of Foldable Table and 1600 units of Flip Chair are available. Also, 1.000 metres of wood and 1,500 metres of steel are available at the end of June 2020. 3. The balances at the end of September 2020 for Foldable Table and Flip Chair are expected to be 20% and 15% higher than the balances at the end of June 2020. 4. The balances at the end of September 2020 for wood is expected to be lower by 10% than the balances at the end of June 2020 while the balances for steel remain the same. Wood and steel will be purchased from supplier at RM20 per metre and RM15 per metre respectively. 6. Wages is paid at RM6 per hour. Each unit of Foldable Table and Flip Chair requires 5 hours and 2 hours of direct labour respectively. 7. The variable overhead is applied at the rate of RM3 per labour hour. 8. The total quarterly fixed production overhead is RM13,440 and is absorbed based on labour hours. 5. Required: a) List five (5) purposes of budgeting. b) Explain two (2) limitations of budgeting (5 marks) (5 marks) c) Prepare the following budget for Indahreka Sdn Bhd for the third quarter of year 2020: i) Sales budget (in quantity and value) ii) Production budget (in quantity) iii) Materials purchase budget (in quantity and value) iv) Direct labour cost budget v) Production cost budget (20 marks) (Total: 30 marks) ) 2. Indahreka Sdn Bhd manufactures two household products, Foldable Table and Flip Chair. As the accountant of Indahreka Sdn Bhd, you have been requested to assist in the preparation of company's operational budget for the third quarter of year 2020. The following data has been approved by the executives in the budget committee. Foldable Table Flip Chair Expected sales (units) 2,000 8,000 Selling price per unit (RM) 180 90 Additional information: 1. There are two types of material used in producing both products, wood and steel. Each unit of Foldable Table uses 4 metres of wood and 2 metres of steel and each unit of Flip Chair uses 2 metres of wood and 1 metre of steel. At the end of June 2020, 400 units of Foldable Table and 1600 units of Flip Chair are available. Also, 1.000 metres of wood and 1,500 metres of steel are available at the end of June 2020. 3. The balances at the end of September 2020 for Foldable Table and Flip Chair are expected to be 20% and 15% higher than the balances at the end of June 2020. 4. The balances at the end of September 2020 for wood is expected to be lower by 10% than the balances at the end of June 2020 while the balances for steel remain the same. Wood and steel will be purchased from supplier at RM20 per metre and RM15 per metre respectively. 6. Wages is paid at RM6 per hour. Each unit of Foldable Table and Flip Chair requires 5 hours and 2 hours of direct labour respectively. 7. The variable overhead is applied at the rate of RM3 per labour hour. 8. The total quarterly fixed production overhead is RM13,440 and is absorbed based on labour hours. 5. Required: a) List five (5) purposes of budgeting. b) Explain two (2) limitations of budgeting (5 marks) (5 marks) c) Prepare the following budget for Indahreka Sdn Bhd for the third quarter of year 2020: i) Sales budget (in quantity and value) ii) Production budget (in quantity) iii) Materials purchase budget (in quantity and value) iv) Direct labour cost budget v) Production cost budget (20 marks) (Total: 30 marks) )