Project Task Details

PR1: Prime solutions

Instructions

Prepare the following budgets for the three months ended 31 August using the information and templates provided below:

Budgets required

a)Sales.

b)Production.

c)Raw Materials Usage.

d)Direct Labour.

e)Factory Overhead.

f)Cost of Production.

g)Cost of Goods Sold.

h)Trading Statement.

Information

Mr. Primrose of Prime Solutions manufactures football trophies which he sells to football clubs for $20.00 each. Each trophy requires the following:

1 block of wood

$4.00

1 metal plaque

1.00

Direct Labour (15 mins at $20 per hour)

5.00

Manufacturing overhead (100% direct labour)

5.00

Total

$15.00

Mr Primrose expects the following sales:

June

July

August

September

500

600

700

800

Mr. Primrose requires inventory at the end of every month equal to 40% of the next month's expected sales. Opening inventory at the beginning of each month is equal to 40% pf the month's expected sales.

NB: complete budgets using the information provided in more detail below for PR1.

Budget Templates

3 Months to 31 August

Sales

Units

Selling Price ($)

Sales

(a)

June

July

Aug

Total

Sept

Sales

Units

CI Inventory

OP Inventory

Sales price

(b)

Production

Units

Sales

Plus CI Inventory

Goods available

Less Op Inventory

Production

(c)

Raw mats Usage

Wood Plaques

Total

Usage

Cost per unit ($)

Usage

(d)

Direct Labour

Usage

Units

Rate per unit

Direct labour

(e)

Factory Overhead

$

(f)

Cost of Production

$

Raw materials

Direct labour

Factory overhead

Total

(g)

Cost of Goods Sold

C.P.U

$

Opening Inventory

Plus production

Goods available

Less Closing Inventory

Production

(h) Trading Statement

Trading Statement $

Sales

less Cost of goods

Gross Profit

PR2- Cash receipts budget

Prepare the Cash budget for the months of January, February and March. (Ignoring GST in this quarter).

Winloose is preparing its budgets for the quarter ending 31 March. The following data is provided.

Actual Sales

November

December

Forecast Sales:

$80,000

100,000

January

February

March

$90,000

$70,000

$50,000

Estimated collections are:

40% of all sales are on credit

50% are collected in the month of sale, with a 2% discount,

30% in the month following sale, and

20% in the second month after sale,

Purchases are estimated at 60% of budgeted sales for the particular month,

80% pf these purchases are paid in the month of purchase and a 3% discount is received,

20% of purchases are paid in the following month.

Budgeted cash expenses from January are as follows:

Advertising

$1,000

Salaries/Wages

8000

Rent

3,500

Interest on Mortgage

500

General expenses

2,000

Salaries and wages will increase by 8% from 1 February. Other cash expenses will remain the same.

Drawings by the Owner amount to $8,000 per month.

The P.A.Y.G. Tax Payable for the December Quarter is $5,000. This amount to be paid by the end of January.

The Bank account balance at 1 January is $4,269.

NB: complete Cash Receipts budgets using the information provided in formats detailed below for PR2.

Templates

Cash Receipts Budget

%

Nov

Dec

Jan

Feb

Mar

Sales

Credit Sales

Same Month

1 month

2 months

Cash Sales

Total cash Collected

Cash Payment Budget

`Dec

Jan

Feb

Mar

Of purchases_______ % Sales

Same Month

1 month

2 Months

Cash Sales

Other Payments:

Total cash Collected

Cash Budget

Jan

Feb

Mar

Total

Opening Cash Balance

A) Add receipts

B) Cash available

C) Less payment

D) Ending Cash balance

PR3:

Review the Cash Budget prepared in PR 2 and give a two (2) minute presentation to your class or assessor on the information contained in that budget and considering the statement in PR3.1.

Your assessor will then ask you verbal questions below and record your answers.To answer the questions accurately you must actively listen to the question and ask for further clarification/information to ensure you understand the question.

Assessor - Please record response given by student to verbal questions: (assessor only use)

PR 3.1

The management of Winloose has a policy to keep a minimum of $15000 in cash at the end of each month and wants to utilise any excess of $15000 cash at the end of month for gainful purposes. Critically analyse the cash position of Winloose at the end of every month and suggest the options available to the management to meet the policy requirements.