Based on the above information, a DM purchases budget (units and $) is created by answering the below questions from the month of February to July.
Production XT1
Production XT2
DM No. 101
Production needs for XT1
Production needs for XT2
Production needs for XT1 and XT2
Plus EI
Total needed
Less OI
Purchases
Cost/unit
Cost purchases
DM No. 102
Production needs for XT1
Production needs for XT2
Production needs for XT1 and XT2
Plus EI
Total needed
Less OI
Purchases
Cost/unit
Cost purchases
Total cost purchases
AutoSave On . Budgeting Assignment (Final)(1) (1) - Saved Search Laura Maslin LM X File Home Insert Page Layout Formulas Data Review View Help Share Comments & Cut _ AutoSum Calibri v 12 ~ A" A " ae Wrap Text Custom X AY O [ Copy Fill Paste BIU DAY E Format Painter E Merge & Center $ ~ % " Conditional Format as Cell Insert Delete Format Sort & Find & Analyze Sensitivity Formatting * Table Styles Clear Filter ~ Select Data Clipboard Font Alignment Number Styles Cells Editing Analysis Sensitivity C21 X Y fx A B C D E F G H K 26 27 c. DM purchases budget (units and $ Jan Feb Mar Apr May Jun Total Jul 28 Production XT1 29 Production XT2 30 DM No. 101 31 Production needs for XT1 32 Production needs for XT2 33 Production needs for XT1 and XT2 34 Plus E 35 Total needed 36 Less O 37 Purchases 38 Cost/unit 39 Cost purchases 40 DM No. 102 41 Production needs for XT1 42 Production needs for XT2 43 Production needs for XT1 and XT2 44 Plus El 45 Total needed 46 Less O 47 Purchases 48 Cost/unit 49 Cost purchases 50 Total cost purchases 51 Data Section Master Budget + Ready + 100% Search O X W 1 0 0 / 1) @ ENG 7:20 AM 17/05/2021AutoSave On . Budgeting Assignment Instructions - Last Modified: Wed at 7:27 AM Search Laura Maslin LM X File Home Insert Design Layout References Mailings Review View Help Share Comments & Cut Times New Romar ~ 12 ~ A" A Aa A Find AaBbCcI 1 AaBb( AaBbCcI AaBbC AaBbCel AaBbCc] Lol [ Copy Paste S'c Replace Format Painter BIU ab X X A LA 1 LO_List INL 1 Normal 1 Problem... 1 Problem... 1 No Spac... Dictate Sensitivity Editor Reuse Select v Files Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor Reuse Files | 1 . 2 . 1 . 1 . 1 . ) . 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 . 1 . 16 1 . 17 . 1. 18. Swisstech Pty Ltd produces two high tech components for the computers industry, the XT1 and XT2. The components are manufactured in a three-step process and each process is treated as a separate cost centre. In the first process, manufacturing, parts of the components are manufactured. In the second process, assembly, these parts are assembled in each component. In the third process, finishing, the components are tested and packaged. 1. Actual sales (from October to December 2020) and projected sales (from January 2021 onwards) of components in units are the following: Month XT1 XT2 October 5,000 3,000 November 6,000 4,000 December 7,500 5.000 January 8,000 6.000 February 9,000 7,000 March 9,000 7,000 Apri 8,000 6,000 May 7,500 5,000 June 9,000 7.000 July 9,500 8,000 August 10,000 9,000 2. The current selling price of XT1 is $100 and XT2 is $150. Swisstech is planning to increase the selling price of these components on 1st April to $110 XT1 and $180 XT2. No other changes in the selling prices are planned. 3. All sales are on credit. Pattern of Collection is: 50% are collected in the month following Page 2 of 8 2659 words DX English (United States) " Focus + 100% Search O m L 1 0 0 7 1) @ ENG 7:20 AM 17/05/2021AutoSave On . Budgeting Assignment Instructions - Last Modified: Wed at 7:27 AM Search Laura Maslin LM X File Home Insert Design Layout References Mailings Review View Help Share Comments & Cut Times New Romar ~ 12 ~ A" A Aa Ap Find AaBbCcI 1 AaBb( AaBbCcI AaBbC AaBbCel AaBbCcI Lol [ Copy Paste S'c Replace Format Painter BIU ab X X A LA 1 LO_List INL 1 Normal 1 Problem... 1 Problem... 1 No Spac. Dictate Sensitivity Editor Reuse Select v Files Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor Reuse Files | 1 . 2 . 1 . 1 . 1 . ) . 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 . 1 . 16 1 . 17 . 1 . 18. 3. All sales are on credit. Pattern of Collection is: 50% are collected in the month following the sale, 30% in the second month following the sale and 20% in the third month following the sale. 4. Materials are purchased on credit. Swisstech pays 60% of purchases in the month of purchase and the remaining 40% in the following month. Data regarding direct materials used in the components are shown in the following schedules (the cost per unit has not changed in the last 12 months): 2 2104AFE Management Accounting T1 2021 Master Budget Case Study Direct material Cost per Units of direct materials per Units of direct materials per unit finished component XT1 finished component XT2 No. 101 $2.40 6 4 No. 102 $3.60 2 5 Page 2 of 8 2659 words DX English (United States) " Focus + 100% Search O L ^ 0 0 / 4) @ ENG 7:20 AM 17/05/2021AutoSave On . Budgeting Assignment Instructions - Last Modified: Wed at 7:27 AM Search Laura Maslin LM X File Home Insert Design Layout References Mailings Review View Help Share Comments & Cut Times New Romar ~ 12 ~ A" A Aa A Find AaBbCcI 1 AaBb( AaBbCcI AaBbC AaBBCcl AaBbCcI Lol Paste [ Copy S'c Replace BIU ab X X A LA 1 LO_List 1 NL 1 Normal 1 Problem... 1 Problem... 1 No Spac... Dictate Sensitivity Editor Reuse Format Painter Select v Files Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor Reuse Files | 1 . 2 . 1 . 1 . 1 . ) . 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14. 1 . 15 . 1 . 16 1 . 17. 1 18. 5. The desired monthly ending inventory for all direct materials is an amount sufficient to produce 60% of the next month's production needs. The inventory levels at 31 December are: Direct material No. 101: 48,000 units Direct material No. 102: 30,960 units 6. The ending balance of work in process each moth is 0. Each month all the units started in work in process are completed and transferred to finished goods inventory. 7. The desired monthly ending finished goods inventory (inventory of completed components) XTI and XT2 is 80% of the next month's estimated sales. There are 6,400 units of XT1 and 4,800 units of XT2 in inventory on December 31, 2020. Assume the cost per unit of the inventory of XT1 and XT2 at 31 December 2020 is the same unit manufacturing cost for the period January - June 2021. 8. Labour costs are paid as they are incurred. Data regarding direct labour for each component in each department (process) are as follows (the cost per DLH has not changed in the last 12 months): Process Cost per Direct labour hours per Direct labour hours per DLH finished component XT1 finished component XT2 Manufacturing $40 0.400 0.600 Assembly $32 1.000 1.200 Finishing $36 0.125 0.200 Page 3 of 8 2659 words DX English (United States) " Focus + 100% Search O L C O ( 1) @ ENG 7:20 AM 17/05/2021AutoSave On . Budgeting Assignment Instructions - Last Modified: Wed at 7:27 AM Search Laura Maslin LM X File Home Insert Design Layout References Mailings Review View Help Share Comments & Cut Times New Romar ~ 12 ~ A" A Aa Ap Find AaBbCcI 1 AaBb( AaBbCcI AaBbC AaBbCel AaBbCc] Lol [ Copy Paste S'c Replace BIU ab X X A LA 1 LO_List INL 1 Normal 1 Problem... 1 Problem... 1 No Spac. Dictate Sensitivity Editor Reuse Format Painter Select v Files Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor Reuse Files | 1 . 2 . 1 . 1 . 1 . . 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 . 1. 16 1 . 17 . 1 . 18. 7. All overhead costs (except depreciation) are paid as they are incurred. Total fixed overhead costs are estimated to be $15,500 per month (including $7,200 depreciation per month), which is the same as the fixed costs per month in the period October - December 2020. Fixed overhead costs are allocated to products (XTI and XT2) according to the number of units produced. Variable overhead costs are based on direct labour hours at the rate of $3.6/DLH in each process or department. w 2104AFE Management Accounting TI 2021 Master Budget Case Study 8. Fixed selling and administrative expenses are estimated are $12,000 per month (including $1,200 of depreciation of office equipment). Variable selling and administrative expenses (sales commissions) are 1.8% of total sales dollars of the same month. Selling and administration expenses are paid in the month incurred. Swisstech's management has a policy of maintaining a cash balance of $12,000 at the end of each month to cover unforeseen needs of cash. If this requirement cannot be met, Swisstech has a standby line of credit arranged with its bank to borrow the exact amount needed to achieve the desired cash balance. If Swisstech estimates a cash shortage by the end of the month, sufficient cash is borrowed at the first day of the month to cover the Page 3 of 8 2659 words DX English (United States) " Focus + 100% Search O m L 1 0 0 7 1) @ ENG 7:20 AM 17/05/2021AutoSave On . Budgeting Assignment Instructions - Last Modified: Wed at 7:27 AM Search Laura Maslin LM X File Home Insert Design Layout References Mailings Review View Help Share Comments & Cut Times New Romar ~ 12 ~ A" A Aa Ap Find AaBbCcI 1 AaBb( AaBbCcI AaBbC AaBbCel AaBbCcI Lol Paste [ Copy S'c Replace BIU ab X X A LA 1 LO_List 1 NL 1 Normal 1 Problem... 1 Problem... 1 No Spac.. Dictate Sensitivity Editor Reuse Format Painter Select v Files Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor Reuse Files | 1 . 2 . 1 . 1 . 1 . X 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 . 1 . 16 1 . 17. 1 18. end of the month, sufficient cash is borrowed at the first day of the month to cover the shortage. If Swisstech has an estimated cash balance greater than $12,000 at the end of any month and an outstanding balance in the line of credit at the beginning of the month, then the cash over $12,000 is used to repay the bank at the first day of the month. The interest rate applicable to the line of credit is 9% per annum to be paid the first day of the following month, calculated on the principal amount outstanding at the end of the month. The line of credit used (owed to the bank) at 31 December 2020 is $4,310,000. 10. The tax rate is 30%. Income tax will be paid on July 2021. 11. The following balance sheet at 31 December 2020 has been prepared from the accounting records of Swisstech Ltd: Balance Sheet Swisstech Ltd As at 31 December 2020 Cash $12,000 Accounts payable $152,000 Accounts receivable 2,290,000 Interest payable 32,325 Materials inventory 226,656 Loan payable (line of credit) 4,310,000 Finished goods inventory 1,021,905 Shareholders' equity 2,656,236 Plant and equipment (net) 6,000,000 Retained earnings 2,400,000 Total Assets 9,550,561 Total liabilities and equity 9,350,561 Page 4 of 8 2659 words DX English (United States) " Focus + 100% Search O L X W 1 0 0 / )) @ ENG 7:20 AM 17/05/2021
