(A) Rahim Sdn Bhd has RM15,000 to invest. Management is trying to decide between two alternative...

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(A) Rahim Sdn Bhd has RM15,000 to invest. Management is trying to decide between two alternative uses for the funds as follows. Investment required Annual cash inflows Life of the project Discount rate @ 12% Project A Project B RM12,000 RM12,000 RM4,000 RM0* 10 years 4 years *Project B has the same investment required, but earns RM2,000 in year 1, and RM500 more every year for the project's life. Required: Calculate NPV for both projects and comment on which project should the company undertake. (6 marks) (B) Hanacook Ltd produces and sells one product. The company is preparing its budget for its forthcoming year, which ends in December. The following fixed costs are planned to be incurred: Production overheads Administration overheads RM'000 720 480 240 Selling overheads The planned selling price per unit and variable costs per unit for the products are as follows: Selling price Variable costs Direct material 10kg Direct labor-6 hours Variable overheads - 6 hours RM'000 106 40 30 12 The company has set a profit objective of RM480,000 for the forthcoming year. March, June, September and November are expected to achieve 10% of the planned sales quantity. The remainder of the planned sales quantity is expected to be achieved equally in the other months. The production of each month's sales is planned as follows: 40% of each month's sales are produced in the month before sale. 60% of each month's sales are produced in the month of sale. The purchase of the direct materials required for each month's production is planned as follows: 50% of each month's direct materials requirements are purchased in the month before the materials are required. 50% of each month's direct materials requirements are purchased in the month the materials are required. The stock of direct materials and finished goods on 1 January is consistent with the above policies. Required: (a) Compute the total budgeted sales quantity (units) for the forthcoming year. (6 marks) (b) Compute the budgeted sales quantity (units) for each of the months of May and November. (5 marks) (c) Prepare the production quantity (units) budget for each of the first three months of the forthcoming year. (4.5 marks) (d) Prepare the direct materials purchases budget (in kilogram and value) for the first three months of the forthcoming year. (8.5 marks) (A) Rahim Sdn Bhd has RM15,000 to invest. Management is trying to decide between two alternative uses for the funds as follows. Investment required Annual cash inflows Life of the project Discount rate @ 12% Project A Project B RM12,000 RM12,000 RM4,000 RM0* 10 years 4 years *Project B has the same investment required, but earns RM2,000 in year 1, and RM500 more every year for the project's life. Required: Calculate NPV for both projects and comment on which project should the company undertake. (6 marks) (B) Hanacook Ltd produces and sells one product. The company is preparing its budget for its forthcoming year, which ends in December. The following fixed costs are planned to be incurred: Production overheads Administration overheads RM'000 720 480 240 Selling overheads The planned selling price per unit and variable costs per unit for the products are as follows: Selling price Variable costs Direct material 10kg Direct labor-6 hours Variable overheads - 6 hours RM'000 106 40 30 12 The company has set a profit objective of RM480,000 for the forthcoming year. March, June, September and November are expected to achieve 10% of the planned sales quantity. The remainder of the planned sales quantity is expected to be achieved equally in the other months. The production of each month's sales is planned as follows: 40% of each month's sales are produced in the month before sale. 60% of each month's sales are produced in the month of sale. The purchase of the direct materials required for each month's production is planned as follows: 50% of each month's direct materials requirements are purchased in the month before the materials are required. 50% of each month's direct materials requirements are purchased in the month the materials are required. The stock of direct materials and finished goods on 1 January is consistent with the above policies. Required: (a) Compute the total budgeted sales quantity (units) for the forthcoming year. (6 marks) (b) Compute the budgeted sales quantity (units) for each of the months of May and November. (5 marks) (c) Prepare the production quantity (units) budget for each of the first three months of the forthcoming year. (4.5 marks) (d) Prepare the direct materials purchases budget (in kilogram and value) for the first three months of the forthcoming year. (8.5 marks)