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Luxury Goods Pty Ltd is preparing a master budget for the quarter ending 30 September 2022 and has compiled the following data. The firm sells
Luxury Goods Pty Ltd is preparing a master budget for the quarter ending 30 September 2022 and has compiled the following data.
- The firm sells a single product at a price of $60 per unit. The sales forecast (in units) prepared by the marketing department for the quarter ending 30 June 2022 and the first 7 months of the next financial year is as follows.
- 40% of the sales are collected in the month of sale, 40% are collected in the following month, and 20% are collected in the second month following the sale.
- The beginning inventories on 1 July 2022 will be 10 800 units of finished goods and no raw materials. The ending finished goods inventory should equal 20% of the sales requirements for the next 3 months, and the raw materials ending inventory should equal 40% of the next months production.
- 80% of the material purchases are paid in the quarter of purchase and 20% are paid in the following quarter. The amount owing for purchases at 1 July 2022 is $196 800.
- Variable selling expenses are 5% of sales. Administrative expenses are $126 000 per quarter, of which $20 000 represents depreciation expense and $96 000 is wages. Fixed selling expenses are $36 000 each quarter. All selling and administrative expenses are paid in the quarter in which they are incurred.
- The production requirements are below.
The direct materials are purchased for $8 a kilogram. The direct labour wage rate is $24 an hour. The factory overhead cost is $154 000 per month and is paid in the month incurred (except for depreciation of $28 000).
- The 1 July 2022 cash balance is expected to be $40 320.
Required: (Do the calculation in excel) 6+4+5+9+12+7=43 Marks
- Prepare a sales budget by month for the period May to September 2022.
- Determine estimated cash collections from receivables for the first quarter of the financial year ending 30 September 2022.
- Calculate the number of units to be produced in the first quarter of the financial year ending 30 September 2022.
- Prepare a direct materials budget for the first quarter of the financial year ending 30 September 2022.
- Prepare a cash budget for the first quarter of the financial year ending 30 September 2022 including any necessary schedules.
- Prepare a budgeted income statement for the first quarter of the financial year ending 30 September 2022.
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