I need assistance in working out those questions. thank you. also My selling, admin and finance budget seems to be incorrect, the figure should be 95,102. thank you

MASTER BUDGET CASE STUDY RICE PRODUCTS PTY LIMITED Rice Products Pty. Ltd. is a local firm that produces two moulded plastic products: kickboards and pool buoys. The products are manufactured in a two step process and each process is treated as a separate cost centre. In the rst process, the mixing department, a special resin is combined with a hardener. Moulding occurs in the Second process where the output from the mixing department is poured into Special shaped moulds. Due to the nature of the chemical compounds contained in the resin and hardener, the manufacturing process occurs very rapidly. Production is therefore scheduled so that no workinprocess inventory is held at the end of each day. The following information has been extracted from the accounting records of Rice Products or obtained through discussions with the senior management team: 1. Balance Sheet (Statement of Financial Position) as at 30 June 2020: Cash $ 9,000 Trade Creditors $ 8,520 Accounts Receivable 85,210 Shareholders' Equity 150,000 Raw Materials Inventory 8,408 Retained Eamings 80,548 Finished Goods Inventory 11,450 Plant and Equipment (Net) 125,000 TOTAL ASSETS $ 239,068 TOTAL LIABILITY 8. EQUITY $ 239,068 2. The following Schedule details the recent actual monthly unit sales achieved for each product to 30 June 2020. Additionally, the sales manager has projected sales volume forecasts for each product to November 2020: mac-mm -IIEII WWW-meal mmmmmmmm 3. Kickboards sell for $28 each and pool buoys for $24 each. Due to the tight cost control practices Rice Products has been able to maintain selling prices for the last 6 months and, in the absence of policy changes, do not foresee any change in the selling prices in the next 6 month period. 4. All sales are on credit: 15% are collected in the month of sale, 45% in the month following sale and the remaining 40% is collected in the second month following sale. 5. Details of the standard costs to manufacture one unit of each product are provided below: FACTORS OF PRODUCTION KICKBOARDS POOL BUOYS Materials Resin 2 litres @$0.45/litre 3 litres @$0.45/litre Hardener 5 litres @$0.70/litre 2 litres @$0.70/litre Labour Mixing Department 18 minutes @$20/hour 12 minutes @$20/hour Moulding Department 12 minutes @$30/hour 12 minutes @$30/hour Factory Overhead: Mixing Department $7.00/direct labour hour $7.00/direct labour hour Moulding Department $11.00/direct labour hour $11.00/direct labour hour 6. Depreciation on factory equipment is computed to be $1.00 per labour hour for each department and is included in the factory overhead rates shown above. 7. Materials are purchased on credit. Rice pays 60% of accounts in the month of purchase and the remaining 40% in the following month. Labour costs and all overhead costs (except depreciation) are paid as they are incurred. Monthly differences between applied and actual overhead costs are expected to be negligible. 8. Rice has an inventory policy in place where purchases of raw materials are scheduled to be 60% of the next month's anticipated production needs. Additionally, production is scheduled so that the number of finished units on hand at the end of each month is sufficient to support 30% of the following month's forecast sales. 9. The number of inventory items held as at 30 June 2020 was as follows: MATERIAL/PRODUCT LITRE/UNIT Resin 5040 litres Hardener 8772 litres Kickboards 720 units Pool Buoys 330 units 10. Fixed selling and administration expenses are $25,000 per month (including $1,000 of depreciation on office equipment). Sales commissions are paid at 7% of total sales dollars. Selling and administration expenses are paid in the month incurred. 11. Rice's management has a policy of maintaining a cash balance of $9,000 at the end of each month. This amount represents a buffer that is maintained as a margin of safety against unforeseen events which might cause significant departures from budget estimates. If this requirement cannot be met,Rice has a standby credit arrangement in place with its bank to borrow the exact amount needed to achieve the desired cash balance. If Rice has a cash balance greater than $9,000 at the end of any month and an outstanding loan balance then the cash in excess of $9,000 is repaid to the bank. 12. The interest rate applicable to the bank loan is 12% per annum to be paid on a monthly basis on the outstanding principal at the end of the previous month. 13. Rice uses the FIFO (first in rst out) method to value ending inventory. PART A (65 Marks) You have been appointed to the position of senior management accountant at Rice Products. It is your responsibility to prepare a master budget for the next quarter (July, August and September 2020). The master budget documents are to consist of the following reports (the budgets should show the figures for each month and a total for the quarter where appropriate and round calculations to the nearest dollar): a Sales Revenue Budget a Production Budget (Units) 0 Direct Material Purchase Budget (Unites and $) 0 Direct Labour Budget (Hours and $) 0 Factory Overhead Budget o Selling, Admin and Finance Budget 0 Cash Budget 0 Income Statement (Statement of Financial Performance) 0 Balance Sheet (Statement of Financial Position) PART B (35 Marks) The directors of Rice Products are concerned about the level of profitability of the company and the need to borrow from the bank. They have discussed the production processes with the production manager and have been assured that the manufacturing departments are operating efficiently and that the equipment used is technically superior to that of competitors in the market. The following policies which have an impact on the company's operating cycle have therefore been suggested as ways to improve the level of profitability and provide a positive cash ow to avoid the need to borrow. As the senior management accountant you have been asked to conduct a sensitivity analysis to determine the effect of each of the possible policy changes currently being considered by the directors. The changes being considered are: (a) (b) (C) (d) Offer customers a cash discount of 2.5% if payment is made in the month of sale. It is anticipated that this would increase the percentage of customers paying in the month of sale to 40%, and those paying in the following two months would reduce by 15% and 10% respectively. Increase the unit price by $2 for kickboards and $1 for pool buoys. The market for swimming aids is very price sensitive and the marketing manager predicts that if this policy is adopted unit sales will decline by 10% for kickboards and 5% for pool buoys. Negotiate with suppliers to extend the existing credit arrangements so that 50% of purchases are paid in the month of purchase and the balance of trade creditors to be paid in the following month. Reduce the margin of safety held in the bank account to $4,500. Restructure the remuneration packages of staff in the sales division. It is proposed to increase the sales commission paid to sales persons by 3% which will reduce monthly xed salaries (f) (9) commitment by $2,000 per month. It is expected that the additional incentive available to the sales staff will result in an increase in unit sales of 5% for each product line. Consideration is being given to undertaking a $1,500 per month marketing campaign to promote the superiority and excellent value of Rice's products. It is expected that the marketing strategy will result in an increase in unit sales of 6% for each product line. Rearrange the factory floor layout and work practices to enable a reduction in the desired level of inventory to be held. Raw materials would be maintained at 50% of next month's production requirements and nished goods at 20% of next month's sales. The change in inventory levels to be held would require a multi-skilled workforce and necessitate a re-negotiation of the current Enterprise Agreement. It is anticipated the wage rates would increase by $0.80 per hour for each department. You are required to conduct a separate 'WHAT IF' analysis for each of the above proposals to assess the effect of EACH policy on the level of protability and cash ows for Rice Products for the three month period ending 30 September 2020 (seven different outcomes). MASTER BUDGET - RICE PTY LTD Schedule 1 Sales Budget July Aug Sept Total Kickboards Pool Bouys Total Sales Revenue Budget Schedule 2 Production Budget (Units) July Aug Sept Total Kickboards Budget Sales Target Ending Inventory Units Required Beginning Inventory Total Production Budget Pool Bouys Budget Sales Target Ending Inventory Units Required Beginning Inventory Total Production Budget 3,340 Schedule 3 Direct Materials Purchases Budget July Aug Sept Total Resin (Litres) Budget Use in Production Target Ending Inventory Units Required Beginning Inventory Total Litres Purchased Resin Purchase Costs Hardener (Litres) Budget Use in Production Target Ending Inventory Units Required Beginning Inventory Total Litres Purchased Hardener Purchase CostsTotal Litres Purchased Hardener Purchase Costs Total DM Purchases Budget $ 42,826 Schedule 4 Direct Labour Budget July Aug Sept Total Mixing Department Direct Labour Hours Direct Labour Costs Moulding Department Direct Labour Hours Direct Labour Costs Total Direct Labour Budget Schedule 5 Factory Overhead Budget July Aug Sept Total Mixing Department Moulding Department Total Factory Overhead Budget Schedule 6 Selling, Admin & Finance Budget July Aug Sept Total Fixed Commission Discount Interest Total Budget $ 95, 102 Schedule 7 Cash Budget July Aug Sept Total Beginning Balance Collections: Current month's sales Previous month's sales Second previous month's sales Total Collections Cash available for needsSecond previous month's sales Total Collections Cash available for needs Payments Current month's purchases Month following purchase Direct Materials Direct Labour Factory Overhead Selling & Admin Interest Total Payments Cash Excess Loan draw down 4,387 Amount available for Loan repayment Loan repayment Balance Loan Balance 3,486 Schedule 8 Income Statement July Aug Sept Total Sales Less: Cost of Goods Sold Beginning inventory Cost of Goods Manufactured Cost of Goods Available for Sale Less: Ending Inventory Cost of Goods Sold Gross Profit Less: Operating Expenses Selling & Admin Finance Net Profit -$ 6,953 Schedule 9 Balance Sheet July Aug SeptSchedule 9 Balance Sheet July Aug Sept Cash Accounts Rble RM Resin Inventory RM Hardener Inventory FG Kickboard Inventory FG Pool Bouy Inventory Plant & Equipment Total Assets $ 232,962 Accounts Payable Loan Total Liabilities Capital Retained Earnings Liabilities and Owners Equity $ 232,962