Please do Part A

Like most other companies, your organization, Appliance Manufacturers Limited, has been severely affected by the global pandemic. Management has decided to take a critical review of its operations to effectively plan a way forward. As the Management Accountant of the company, you have been asked to prepare some reports for the next Board meeting to assist Management in their task. The company presently has two main production lines, producing Refrigerators and Stoves. Management has identified three main areas of the operations from which they would like specific reports. These are as follows: A) Manufacturing Costs Marks 30 Management was very concerned that their traditional method of costing may no longer be appropriate and wanted to consider using the ABC costing method. It has been suggested that three Cost pools be established, with the following cost Drivers, and the Overhead cost be shared among them as follows: Cost Pool Amount Cost Driver Assembling Manufacturing Inspecting $ 50,000 $ 54,000 $ 16,000 Labour cost Labour Hours Number Inspections of In the month of January, the following production data was recorded: Refrigerators Stoves Units produced Direct Materials Used Direct Labour Cost Direct Labour Hours Number of Inspections Work in Progress at the start of the month Work in Progress at the end of the month. 15,000 $ 75,000 $ 40,000 12,000 300 $ 12,500 25,000 $ 125,000 $ 72,000 15,000 500 $ 14,000 $ 7,500 $ 12,000 Manufacturing Overheads for the month amounted to $ 120,000 and this was allocated equally between the two products, using the traditional approach. You were asked to: a) Prepare a report showing the manufacturing cost of each Refrigerator and each Stove. 10 Marks b) Prepare a cost of production report using the ABC approach. 20 Marks 35 B) Productivity and Profitability Marks Recognising that there would be fierce competition to regain lost markets, Management felt that there should be a renewed focus on the productivity and profitability of the operations. The productivity analysis would focus on the Manufacturing department, and the profitability would examine both products. To conduct this analysis, you have extracted the following information for the Manufacturing Department for the month of January: At the start of the month there were 1,000 units in stock, which were 20% complete with respect to conversion costs, and was valued at $ 16,000. > During the month, 9,000 units were introduced to the production. At the end of the month there were 1,000 units in stock which were 40% complete with respect to conversion costs. All Materials are added at the start of the process. > Costs incurred for the month were: Materials - $ 63,000; Conversion costs - $ 139,840. The Department uses a FIFO costing system. Further examination of the records showed the following: Refrigerators Stoves Sales Mix % Selling Price Variable Costs 60% 2,500 2,000 40% 1,200 950 Fixed Costs were currently $ 120,000 Refrigerators Stoves Sales Mix % Selling Price Variable Costs 60% 2,500 2,000 40% 1,200 950 Fixed Costs were currently $ 120,000 You have also learnt that there are only 30,000 machine hours available on the present equipment and that the Refrigerators utilizes 2 hours per unit while the stoves uses 2.5 hours. Management has asked you to: a) Prepare a Production Cost Report for the Manufacturing Department for the month of January 2021. 20 Marks b) Compute the quantity of each product that needs to be sold to achieve a break even position. 10 Marks c) Advise management as to which unit should be given preference in production given the limited number machine hours available. 5 Marks C) Budgeting and Planning Marks 40 Accepting that there is now a greater need to plan properly for the future, Management has sought your help in revisiting their existing budgets, especially those affecting the cash flow of the company. It had been agreed that the company should maintain a balance of at least $ 40,000 at all times. The balance at the start of the year was $ 45,000. The current sales policy allows for all sales to be done on a credit basis with 50% of the sales being collected in the month of sale; 40% in the next month and 10% in the second month after the sale. Sales projections for the first three months of 2021 are as follows: January $ 150,000 February $ 160,000 March $ 180,000 You have also learnt that sales in the months of November and December 2020, were $ 130,000 and $ 140,000 respectively. The purchasing policy is also under scrutiny as the market gets more demanding. Currently all purchases are on credit also and payments are made with 30% in the month of purchase, 50% in the following month and the balance in the second month. Purchases for November and December in 2020 were, $ 75,000 and $ 80,000 respectively. In 2021 these are expected to increase to $ 100,000 in January, $ 110,000 in February and $90,000 in March. In additiion the company has the following monthly expenses which have to be paid: January February March 30,000 20,000 35,000 15,000 20,000 12,000 Direct Labour Selling & Administrative Expenses Maintenance Costs Motor Vehicle Expenses 5,000 3,000 7,500 4,500 3,000 2,500 You are asked to: a) Prepare a cash collections budget for the first three months of 2021. 12 Marks b) Prepare a cash payment budget for the purchases for 2021. 12 Marks c) Prepare a Cash budget for the first three months of 2021. 16 Marks Like most other companies, your organization. Appliance Manufacturers Limited, has been severely affected by the global pandemic Management has decided to take a critical review of its operations to effectively plan a way forward As the Management Accountant of the company, you have been asked to prepare some reports for the next Board meeting to assist Management in their task. The company presently has two main production lines, producing Refrigerators and Stoves. Management has identified three main areas of the operations from which they would like specific reports. These are as follows: A) Manufacturing Costs 30 Marks Management was very concerned that their traditional method of costing may no longer be appropriate and wanted to consider using the ABC costing method. It has been suggested that three Cost pools be established, with the following cost Drivers, and the Overhead cost be shared among them as follows: Cost Pool Amount Cost Driver Assembling Manufacturing Inspecting $ 50.000 $ 54.000 $ 16,000 Labour cost Labour Hours Number Inspections of In the month of January, the following production data was recorded: Refrigerators Stoves Units produced Direct Materials Used Direct Labour Cost Direct Labour Hours Number of Inspections Work in Progress at the start of the month Work in Progress at the end of the month 15,000 $ 75,000 $ 40,000 12.000 300 $ 12,500 25,000 $ 125,000 $72,000 15.000 500 $ 14,000 $7,500 $ 12,000 Manufacturing Overheads for the month amounted to s 120,000 and this was allocated equally between the two products, using the traditional approach. You were asked to: a) Prepare a report showing the manufacturing cost of each Refrigerator and each Stove. 10 Marks b) Prepare a cost of production report using the ABC approach. 20 Marks B) Productivity and Profitability 35 M