how to prepare the budget income statement and the budget balance sheet
Section A-Master Budget Problem Comprehensive Master Budget: ABC Costing, Operating & Financial Budgets Nupes is a famous stick-candy maker in Sydney and produces stick-candies in two sizes, i.e., regular and large. The company sells their products on several platforms such as stores, fairs, schools for fundraisers and in bulk on the internet. 2020 summer is approaching, and Nupes is preparing its budget for December. All Nupes's stick- candies are hand-made, mostly out of sugar, and attached to sticks. Expected sales are based on past experience. Other information for December 2020 is as follows: Input prices Direct materials: Sugar Sticks Direct manufacturing labour $0.45 per kg $0.55 each $9 per direct manufacturing labour hour (DMLH) Large Input quantities per unit of output Regular Direct materials: Sugar Sticks 1 Direct manufacturing labour hour (DMLH) 0.22 hour Set-up hours per batch 0.11 hour 0.25 kg 0.50 kg 1 0.31 hour 0.13 hour 150 kg Inventory data for direct materials Sugar Sticks Beginning inventory 415 Target ending inventory 275 kg 515 Cost of beginning inventory $65 $107 Nupes accounts for direct materials using a FIFO cost flow assumption. Sales and inventory data for finished goods? Regular Large Expected sales in units 3,500 2,300 Selling price $5.5 $6.5 Target ending inventory in units 350 190 Beginning inventory in units 235 165 Beginning inventory in dollars $510 $480 Nupes uses a FIFO cost flow assumption for finished goods inventory. All the stick-candies are made in batches of 10. Nupes incurs manufacturing overhead cost, and marketing and general administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very small. Nupes uses activity-based costing (ABC) and has classified all overhead costs for December 2020 as follows: Denominator activity Rate Cost type Manufacturing: Set-up Processing Set-up hours Direct manufacturing labour hour (DMLH) $24 per set-up hour $2.1 per DMLH Non-manufacturing: Marketing & general admin Sales revenue 12% Nupes Balance Sheet as of 30 November 2020 Assets Cash $2,000 Account receivable $4,800 Less: Allowance for bad debts 96 4,704 Inventories: Direct materials 172 Finished goods 990 Fixed assets $190,000 Less: Accumulated depreciation 55,759 134,241 Total assets $142,107 Liabilities and equity Account payable $696 Taxes payable 500 Interest payable 200 Long-term debt 20,000 Ordinary shares 10,000 Retained earnings 110,711 Total liabilities and equity $142,107 3. Prepare a budgeted income statement for December 2020 and a budgeted balance sheet for Nupes as of 31 December 2020. (5 marks) Section A-Master Budget Problem Comprehensive Master Budget: ABC Costing, Operating & Financial Budgets Nupes is a famous stick-candy maker in Sydney and produces stick-candies in two sizes, i.e., regular and large. The company sells their products on several platforms such as stores, fairs, schools for fundraisers and in bulk on the internet. 2020 summer is approaching, and Nupes is preparing its budget for December. All Nupes's stick- candies are hand-made, mostly out of sugar, and attached to sticks. Expected sales are based on past experience. Other information for December 2020 is as follows: Input prices Direct materials: Sugar Sticks Direct manufacturing labour $0.45 per kg $0.55 each $9 per direct manufacturing labour hour (DMLH) Large Input quantities per unit of output Regular Direct materials: Sugar Sticks 1 Direct manufacturing labour hour (DMLH) 0.22 hour Set-up hours per batch 0.11 hour 0.25 kg 0.50 kg 1 0.31 hour 0.13 hour 150 kg Inventory data for direct materials Sugar Sticks Beginning inventory 415 Target ending inventory 275 kg 515 Cost of beginning inventory $65 $107 Nupes accounts for direct materials using a FIFO cost flow assumption. Sales and inventory data for finished goods? Regular Large Expected sales in units 3,500 2,300 Selling price $5.5 $6.5 Target ending inventory in units 350 190 Beginning inventory in units 235 165 Beginning inventory in dollars $510 $480 Nupes uses a FIFO cost flow assumption for finished goods inventory. All the stick-candies are made in batches of 10. Nupes incurs manufacturing overhead cost, and marketing and general administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very small. Nupes uses activity-based costing (ABC) and has classified all overhead costs for December 2020 as follows: Denominator activity Rate Cost type Manufacturing: Set-up Processing Set-up hours Direct manufacturing labour hour (DMLH) $24 per set-up hour $2.1 per DMLH Non-manufacturing: Marketing & general admin Sales revenue 12% Nupes Balance Sheet as of 30 November 2020 Assets Cash $2,000 Account receivable $4,800 Less: Allowance for bad debts 96 4,704 Inventories: Direct materials 172 Finished goods 990 Fixed assets $190,000 Less: Accumulated depreciation 55,759 134,241 Total assets $142,107 Liabilities and equity Account payable $696 Taxes payable 500 Interest payable 200 Long-term debt 20,000 Ordinary shares 10,000 Retained earnings 110,711 Total liabilities and equity $142,107 3. Prepare a budgeted income statement for December 2020 and a budgeted balance sheet for Nupes as of 31 December 2020
