Question 2 only.
This individual project is worth 60% of your final grade. The assignment is due on May 15th, 2020. Question 1 (30 Marks) The concept of budgeting has been a long established management accounting concept though some managers view budget preparation as a waste of time which could be used more productively. This position has been suggested by the beyond budgeting roundtable. Critically review the budgeting concepts and the views suggested by the beyond budgeting round table to present your views on the methods which should be adopted in the future. Question 2 (50 Marks) The East Division of K Company manufactures a component that is vital to the health care Industry. This Division has been experiencing some problems in coordinating activities between various departments which resulted in acute and embarrassing shortages in the industry in the past. The divisions Manager in an effort to avoid future shortages has decided to reinforce the decision to have monthly budgets prepared to aid in the production process. To assist in preparing the second Quarter's budgets, the Financial Controller has provided the following actual and budgeted information. January (actual) February (actual) March (actual) April (Budget) May (budget) Junc(budget) July (budget) August (budget) 6.000 10,000 14.000 20,000 35,000 50,000 45,000 30,000 Direct Material Two different materials are used in the production of the component. Data related to these materials are given below: The actual fixed manufacturing overhead cost incurred during the first quarter amounted to $1,170,000. The East Division has budgeted fixed manufacturing overhead cost for the year as follows: Year Actual for budget first quarter Supervision $ 872.000 $ 224.000 Property taxes 143,000 37,750 Depreciation 2,910,000 727,500 Insurance 631.000 157.750 Other 72.000 23,000 Total fixed manufacturing $4.628.000 $1.170.000 overheads Finished Goods Inventory The desired ending inventory in completed components is 20% of the next's month's estimated sales. The East Division has 4,000 components in finished goods inventory at March 31. Required 1. Prepare the production budget foe East Division for the second quarter ending June 30 showing computations by month and in total for the quarter. 2. Prepare the direct materials purchase budget in units and dollars for each type of material for the second quarter ending June 30 also showing computations by month and in total for the quarter. 3. Prepare the direct labour budget in hours and in dollars for the second quarter ending June 30 showing only the quarter totals. 4. Assuming that the total fixed cost for the year will not change from the original estimates, prepare the variable and fixed overheard budgets for the second quarter by line item. This individual project is worth 60% of your final grade. The assignment is due on May 15th, 2020. Question 1 (30 Marks) The concept of budgeting has been a long established management accounting concept though some managers view budget preparation as a waste of time which could be used more productively. This position has been suggested by the beyond budgeting roundtable. Critically review the budgeting concepts and the views suggested by the beyond budgeting round table to present your views on the methods which should be adopted in the future. Question 2 (50 Marks) The East Division of K Company manufactures a component that is vital to the health care Industry. This Division has been experiencing some problems in coordinating activities between various departments which resulted in acute and embarrassing shortages in the industry in the past. The divisions Manager in an effort to avoid future shortages has decided to reinforce the decision to have monthly budgets prepared to aid in the production process. To assist in preparing the second Quarter's budgets, the Financial Controller has provided the following actual and budgeted information. January (actual) February (actual) March (actual) April (Budget) May (budget) Junc(budget) July (budget) August (budget) 6.000 10,000 14.000 20,000 35,000 50,000 45,000 30,000 Direct Material Two different materials are used in the production of the component. Data related to these materials are given below: The actual fixed manufacturing overhead cost incurred during the first quarter amounted to $1,170,000. The East Division has budgeted fixed manufacturing overhead cost for the year as follows: Year Actual for budget first quarter Supervision $ 872.000 $ 224.000 Property taxes 143,000 37,750 Depreciation 2,910,000 727,500 Insurance 631.000 157.750 Other 72.000 23,000 Total fixed manufacturing $4.628.000 $1.170.000 overheads Finished Goods Inventory The desired ending inventory in completed components is 20% of the next's month's estimated sales. The East Division has 4,000 components in finished goods inventory at March 31. Required 1. Prepare the production budget foe East Division for the second quarter ending June 30 showing computations by month and in total for the quarter. 2. Prepare the direct materials purchase budget in units and dollars for each type of material for the second quarter ending June 30 also showing computations by month and in total for the quarter. 3. Prepare the direct labour budget in hours and in dollars for the second quarter ending June 30 showing only the quarter totals. 4. Assuming that the total fixed cost for the year will not change from the original estimates, prepare the variable and fixed overheard budgets for the second quarter by line item
