(A) The management accountant of Kaizen Sdn Bhd is preparing a monthly cash budget for the next three months. The following information are available: September October November Sales 250,000 300,000 315,000 Production costs 150,000 180,000 185,000 Selling and administrative costs 42,000 48,000 51,000 Capital expenditures 200,000 The company plans to sell about 10% of its product for cash. Seventy per cent of sales on account are expected to be collected in the month following the sales and the remainder will be collected in the following month of sale. Depreciation, insurance and property tax expense amounted to RM50,000 of the estimated monthly production costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the production costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of 1st September include cash of RM40,000, marketable securities of RM75,000, and accounts receivable of RM300,000 (RM60,000 from July sales and RM240,000 from August sales). Sales on account for July and August were RM200,000 and RM240,000, respectively. Accounts payable 3 as of 1st September is RM40,000 which is incurred in August for production costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of RM55,000 will be made in October. The company regular quarterly dividend of RM25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of RM60,000. Required:

(a) Prepare a monthly cash budget and supporting schedules for September, October and November. (Show your workings clearly). (18 marks)

(b) Referring to the cash budget that you have prepared, what recommendation should be made to the management accountant. (5 marks)

(B) The following is monthly static budget of Assembling Division for Rubic Sdn Bhd: Wages RM2,250,000 Utilities 72,000 Depreciation 36,000 Total RM2,358,000 4 The actual amount spent and the actual units produced in June and July 2021 in the division were as follows: Amount spent (RM) Units produced June 1,950,000 48,000 July 2,200,000 52,000 The Assembling Division supervisor has been very happy with this performance because actual expenditures for June and July have been significantly less than the monthly static budget. However, the factory manager believes that the budget should not remain fixed for every month but should flex to the volume of work that is produced in the Assembling Division. Additional budget information for the division is as follows: Wages per hour RM25.00 Utility cost per direct labor hour RM0.80 Direct labor hours per unit 1.5 Planned monthly unit production 60,000 Required:

(a) Prepare a flexible budget for the actual units for June and July in the Assembling Division. Assume depreciation is a fixed cost. (Show your workings clearly). (10 marks)

(b) Compare the flexible budget with the actual expenditures for June and July. Explain your view