PLEASE PREPARE FUNCTIONAL AND MASTER BUDGETS FROM THE INFORMATION PROVIDED. (ZOOM IN TO SEE THE IMAGES)
Case Scenario Overhead is recovered on a direct labour hour basis. C. Information for the FY 2020 of the standard material and labour usage for each product is as follows: XYZ Company manufactures and sells two different brands of electronic products, known as Pebble 101' and 'Stone 101'. "Pebble 101'is produced in department 1 and 'Stone 101' in department 2. The business has a capital investment of more than RO 700,000, with 450 employees working in manufacturing and administrative units of the company. The financial statements of last two years (FY 2019 & FY 2018) of XYZ Company has revealed an overall decline in sales, profitability and liquidity position. The directors of XYZ Company are concerned about this sudden decline in the performance and prospects of the Company. Finished product 'Stone 101' Pebble 101 20 Material 'A' in Units Material 'B' in units Direct labour in hours 10 20 25 Material 'B' You have recently joined as a trainee management Accountant in XYZ Company and are now a part of the Management Accounting team. Directors want company's management accounting team to prepare functional & master budgets for the financial year 2020, calculate relevant financial ratios considering benchmarks, key performance indicators and budgetary targets, identify variances for last two financial years, apply relevant strategic planning tools , financial governance to monitor strategy, management accounting skill sets and effective strategies and systems and compare the ways in which Company can respond to financial problems effectively and efficiently. XYZ Company's budgeted information (FY 2020) & financial statements of last two years (FY 2019 & FY 2018) are given below:- D. Information for the FY 2020 of Direct Material Material 'A' Beginning inventory (unit) 9,500 Ending inventory required (unit) 20,200 9,000 2,700 E. Factory overhead budget information for the FY 2020 Department 1 RO Department 2 RO A. Sales Budget information for FY 2020. Finished product *Pebble 101' 9,500 400 2,870 270 Forecasted Sales (Units) Selling price per unit in RO Ending inventory required (units) Beginning inventory (unit) Budgeted variable overheads rates (Per direct labour hours) Indirect materials Indirect Labour Power (Variable Portion) Maintenance (Variable Portion 'Stone 101 2600 300 100 95 0.4 0.4 0.25 0.06 L B. Information for the FY 2020 of Standard material cost per unit and labour costs per hour: Budgeted fixed overheads Depreciation Supervision Power (fixed portion) Maintenance (Fixed portion) 30,000 20,000 35.000 35,000 20,000 21,400 600 RO 2.8 899 Material A Material 'B' Direct labour F. Non-manufacturing overheads budgeted Information for the FY 2020: Stock of finished goods 136,500 Stock of Raw materials 71,600 Debtors Cash 82,250 9.500 299,850 Information of Estimated non-manufacturing overheads: Stationary etc. (Administration) Salaries sales Salaries office Commissions Car expenses (Sales) Advertising Miscellaneous (Office) TOTAL RO 2000 28,500 8,000 25,000 6,500 30.000 4.000 104.000 Less current liabilities Creditors Net assets 72,200 227,650 949,672 Equity: Represented by shareholder's interest: 700,000 ordinary shares of RO 1 each Reserves Equity 700,000 249,672 949,672 G. Opening cash balance is RO 9500 for the financial year 2020 H. Cash flows Budgeted Information for the FY 2020 are as follows: J. Actual Statements of financial position as at 31st Dec Quarter 1 RO 650,000 Quarter 2 RO 700,000 Quarter 3 RO 880.000 Quarter 4 RO 846 250 Amt in RO 2019 2018 Receipts from customers Payments: Materials Payment for wages Other costs and expenses RO000 RO^000 300,000 303,406 | 30,000 320,000 330,000 25,000 250,000 360,000 218,004 336,996 235,094 333,409 Non-current assets (carrying value) 390,000 360,000 Current assets Inventory 90,000 63,000 Receivable 102,000 53,200 I. Budgeted balance sheet for the previous year ended 2019 was as follows: RORO Non-current assets: Land | Building and equipment 523,000 Less: Depreciation 63,750 262,772 Cash 65,000 70,000 Total Assets 647,000 546,200 459,250 722,022 Current assets
