Question 1 Dudley Manufacturing is preparing its master budget for the first month of the upcoming year. The following data pertain to ar East Manufacturing's operations: Account Balances as at December 31(prior year): Cash RM4,500 Account Receivable, net RM50,000 Inventory RM15,000 Account Payable RM42,400 Actual sales in December were RM70,000. Selling price per unit is projected to remain stable at RM10 per unit throughout the budget period. Sales for the first two months of the upcoming year are budgeted to be as follows: January RM83.000 February RM92,000 Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. Far East Manufacturing has a policy that states that each month's ending inventory of finished goods should be 25% of the following month's sales in units). . Of each month's direct material purchase, 10% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at RM2 per pound. Ending inventory of direct materials should be 10% of next month's production needs. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hour per unit is 0.02. The direct labor rate per hour is RM10 per hour. All direct labor is paid for in the month in which the work is performed Monthly manufacturing overhead costs are RM8,000 and RM1.20 per unit produced for variable manufacturing overhead. Depreciation is included in these figures. All expenses are paid in the month in which they are incurred. Depreciation on the factory equipment and building is budgeted to be RM600 per month. Computer equipment for the administrative offices will be purchased in the upcoming month. In January, Far East Manufacturing will purchase equipment for RM6,200 (cash). Operating expenses are budgeted to be RMI per unit sold plus fixed operating expenses of RM2,000 per month. All operating expenses are paid in the month in which they are incurred. Depreciation is excluded in these figures Depreciation on the building and equipment for the general and administrative offices is budgeted to be RM500 per month, which includes depreciation on new acquisitions. Far East Manufacturing has a policy that the ending cash balance in each month must be at least RM4,000. It has a line of credit with a local bank. The company can borrow increments of RM1,000 at the beginning of each month, up to a total outstanding loan balance of RM16,000. The interest rate on these loans is 2% per month simple interest. Required: (a) Prepare a schedule of cash collection for January. (3 marks) (b) Prepare a production budget for January (3 marks) (e) Prepare direct material purchases budget for January (5 marks) (d) Prepare a schedule of cash disbursement (for all payments) for January, (7 marks) (e) Prepare a cash budget for January. Show appropriate amount of financing needed if necessary. (3 marks) (1) Strategy, plans and budget are unrelated. Do you agree? Explain. (4 marks) [Total : 25 marks)