Question 1: Assume you're an operations manager who has been working at ABC Company for the past month. You have recently found out that the company has never set a budget plan for their productions. Due to the lack of budget plan, the company was not able to communicate their objectives in an efficient way therefore was not able to evaluate the performance at departmental level. In order for you to be able to convince the top management that a budget plan is essential for every company, you are required to clearly state the benefits of budgeting to them. Furthermore, you are to explain the three different types of budgeting that the company may adopt and explain which type do you think is more effective. (1*3 marks for types of budget = 3, 2 marks for analysis = 5 Marks total) Question 2: Company Arwin, have been setting standards on prices which helped them specify how much should be paid for each unit of the input but have failed to set a quantity standard. As an employee, you are required to convince the management that setting a quantity standard is also important for a more efficient measurement of the company's performance. (1 Mark for definition, 4 Marks for explanation = 5 Marks) PART II. PROBLEM SOLVING Directions: Read the problems carefully, analyze and solve them. Legibly

answers and on an A4 paper. Question 1: ABC Company plans to sell 250,000 units of finished product in July and anticipates a growth rate in sales of 6% per month. There are 200,000 finished units in inventory on June 30. The desired monthly ending inventory in units of finished product is 75% of the next month's estimated sales. Determine the production requirement in units of finished product for the July-October. (Marking Scheme: 3 marks for each months calculation = 3*3 = 9 Marks) Question 2: The Treasury manager at XYZ Company is targeting to make a specific amount of sales for the first three months of 2021. Based on his analysis, he expects to sell products worth $130,000 in January, $170,000 in February, and $200,000 in March. Based on their analysis, they expect to receive 50% of the amount target in the month of sale, 10% in the month following sale and 40% in the second month following sale. After the manager conducted an analysis of the cash collection, he determines that the company's target collection for March should be $225,000. Based on your answer, determine whether the target set by the manager is correct or not. (Marking Scheme: 4 marks for computation; 2 marks for analysis = 6 Marks) Question 3: Trex Manufacturing decorative doors are preparing for next year's operations. The Management have developed the following estimates. Help the company determine their contribution margin in both units and ratio (1 marks each = 2 Marks), Break even in dollars and units (1 marks each = 2 Marks), Margin of safety in percentage and amount (1 marks each = 2 Marks), and if the management have decided that the company's traget net operating income is $860,000, determine the degree of operating levearge (3 marks computation, 3 marks analysis = 6 Marks) Total Per Unit Sales (40,000 units) $ 2,000,000 $ 53 Direct Materials $ 210,000 $ 12 Direct Labor (Variable) $ 50,000 $ 4 Manufacturing Overhead: Variable $ 60,000 $ 6 Fixed $ 55,000 $ 6 Selling & Administrative: Variable $ 95,000 $ 8 Fixed $ 40,000 $ 3.50 Question 4: The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 Unfavorable; and the standard quantity of materials allowed for July production was 21,750 pounds. Estimate the materials price variance for July. (Marking Scheme: 5 marks of computation; 3 marks for analysis = 7 marks) Question 5: The following labor standards have been established for a particular product. Predict the variance and interpret the cause of labor efficiency variance for the month. (Marking Scheme: 4 marks of computation; 2 marks for analysis = 6 marks) Standard labor hours per unit of output 4 hours Standard labor rate $ 12.30 per hour Actual hours worked 7,100 hours Actual total labor cost $ 89,105 Actual output 1,500 units