makes and sells t-shirts. CUTE T-SHIRT has decided to introduce a new design t-shirt to commemorate a major international sporting event taking place at the beginning February next year. The commemorative t-shirts will be sold for RM60 each, and will released in January The predicted sales for the t-shirts are as follows: 3,600 t-shirts 5,000 t-shirts 4,500 t-shirts 4,500 t-shirts 2,000 t-shirts January February March April May For this new line, CUTE T-SHIRT plans to have 20% of t-shirts ready for sales in the following month. There will be no beginning finished goods inventory in January. To make one t-shirt, 0.8 meter of fabric is used. The fabric, which is custom-designed, will RM20 per meter. Based on CUTE T-SHIRT past experience, a handful amount of fabric normally wasted during the cutting and sewing processes due to human errors. To ensure smooth production process, CUTE T-SHIRT follows the following policy: to order an additional 5% of the current month's production needs; to maintain 25% of the following month production needs (inclusive of the additional 5% requirement) as ending inventory. The beginning inventory of the fabric in January will be 500 meters. CUTE T-SHIRT allocates eight direct labours - three for cutting, and five for sewing; to work for this new line. It takes 3 minutes to cut one t-shirt, and another 15 minutes to sew. Each direct labour is paid RM10 per hour. CUTE T-SHIRT follows a normal 9-hour workday workweek, and guarantees each direct labour a minimum salary based on the normal working hours. Any hours worked in excess of the normal working hours are paid RM15 per hour. or 45-hour Required: i. Prepare the following budgets for the months of January, February and March; and the quarter: Sales; Production; Direct material purchase costs; and Direct labour costs. a. b. d ii. Why is the sales forecast the starting point for budgeting? ii. Define the term budgetary slack, and briefly describe a problem it can cause

ASSIGNMENT 2 (BUDGET) CUTE T-SHIRT makes and sells t-shirts. CUTE T-SHIRT has decided to introduce a new design of t-shirt to commemorate a major international sporting event taking place at the beginning of February next year. The commemorative t-shirts will be sold for RM60 cach, and will be released in January. The predicted sales for the t-shirts are as follows: January 3,600 t-shirts February 5,000 t-shirts March 4,500 t-shirts April 4,500 t-shirts May 2,000 t-shirts For this new line, CUTE T-SHIRT plans to have 20% of t-shirts ready for sales in the following month. There will be no beginning finished goods inventory in January. To make one t-shirt, 0.8 meter of fabric is used. The fabric, which is custom-designed, will cost RM20 per meter. Based on CUTE T-SHIRT past experience, a handful amount of fabric is normally wasted during the cutting and sewing processes due to human errors. To ensure a smooth production process, CUTE T-SHIRT follows the following policy: to order an additional 5% of the current month's production needs; to maintain 25% of the following month production needs (inclusive of the additional 5% requirement) as ending inventory. The beginning inventory of the fabric in January will be 500 meters. CUTE T-SHIRT allocates eight direct labours - three for cutting, and five for sewing: to work for this new line. It takes 3 minutes to cut one t-shirt, and another 15 minutes to sew. Each direct labour is paid RM10 per hour. CUTE T-SHIRT follows a normal 9-hour workday or 45-hour workweek, and guarantees cach direct labour a minimum salary based on the normal working hours. Any hours worked in excess of the normal working hours are paid RM15 per hour Required: i. Prepare the following budgets for the months of January, February and March; and the quarter: Sales; Production; Direct material purchase costs, and Direct labour costs. ii. Why is the sales forecast the starting point for budgeting? iii. Define the term budgetary slack, and briefly describe a problem it can cause (20 marks) (2 marks) (3 marks) TOTAL: 25 MARKS]