BigBossProject

Big Boss Limited was formed two years ago by Joshua Sealers. He had the idea to make aproduct for Quick Service Restaurants that would be easy and convenient to prepare. He boughtseveralusedplantsandequipmentfromacompany thatwasinvolved in makingasimilar productbut was leaving the industry. Big Boss estimated that the equipment would be able to last for 10yearsonceit was properlymaintained. Hecalled hisfinishedproduct "Sweet".

The budget for the next four months ending 31 July 2023 is to be prepared. The following datawasgathered:

1. ProjectedStatementof FinancialPositionasat31March2023:

	$	$
ASSETS
Non-currentAssets
Plantand equipmentatcost	1,440,000
LessAccumulateddepreciation	288,000	1,152,000
CurrentAssets
Rawmaterials	30,750
Finished Finished goodsProjected closinggoods	38,750
AccountsReceivables	200,000
Cash	554,250	823,750
		1,975,750
EQUITIESANDLIABILITIES
Capital
Sharecapital		1,147,300
Accumulatedprofits(RetainedEarnings)		600,000
		1,747,300
CurrentLiabilities
AccountsPayables		228,450
		1,975,750

1. Salesandproductiondata:

	Sweet
Salesdemandfor finishedgoods:
April	5,000units
May	7,500units
June	12,500units
July	15,000units
August	12,000units
Sellingpriceperunit	$200
Finishedgoods:
Projectedclosinginventoryat31March 2023	250units
Unitcost offinished goodsinventory	$155per unit
Variableproductionoverhead-directlabourhours requiredforproduction:
Processing	12mins
Costperhourforvariable overhead	$50perhour
Fixed production overhead per month includingdepreciationof $8,000	$45,000
Materialrequirementper unit:
Rawmaterial	0.40lbs
Directlabourhoursrequiredperunit	12 minutes
Directlabour rateperhour	$100perhour

1. Rawmaterials

	Material
Closinginventoryinlbsat31 March2023	102.50
Closinginventoryin lbsat 31 July 2023	597.50
Budgetedcostofraw materialperlb	$300per lb

Actual costs per pound of opening raw material inventories are as budgeted for the comingperiod.

1. The company maintains a policy of holding 5% of the next month's demand for "Sweet" ininventory. The policy for raw materials is to maintain 5% of next month's requirements ininventory.

1. Collectionfromcustomersisexpectedtobe asfollows:
   • 90%inthemonth in which thesales aremade
   • 10%in thefirstmonthafterthesale

1. 80% of all raw materials purchased are expected to be paid for in the month of purchase withtheremaining amountbeing paid in thefollowing month.

1. SellingandAdministrativeexpensesareexpected tobe:
   • Variable-2%ofsales revenue
   • Fixed$100,000permonth including$4,000fordepreciation.

1. Taxpayable represents 25%ofprofit beforetaxandispaidonMarch15eachyearfor profitmadein theprioryear. Profit beforetaxfortheyear ended December 31,2022 was

$600,000.

Required:

1. Prepare the following budgets for Best Friends Pre-season Limited by month and in total for the fourmonthsending July 31,2023:
   1. Salesbudget. (6marks)

1. Scheduleofcashcollectedfrom customers. (10marks)

1. Production budget. (17marks)

1. Direct-materialusageandpurchasesbudget. (23marks)

1. Scheduleofcashdisbursementtosuppliers fordirectmaterial. (10marks)

1. Directlabour budget. (9marks)

1. Productionoverheadbudget. (11marks)

1. Sellingandadministrativebudget (11marks)

1. Cashbudget (25marks)

1. Preparethefollowing budgetsintotal onlyforthefourmonthsendingJuly 31,2023:
   1. Cost ofgoodssoldbudget. (8marks)

1. BudgetedStatement ofProfit orLoss. (5marks)

1. BudgetedStatement ofFinancial Position. (13 marks)[Total150marks]