Question 3 (30 marks) SouthWonder company produce and sell bamboo frame for $25 each. Requirements of direct materials and direct labour to produce each bamboo frame are as follows: Direct material

4 linear feet of bamboo

Direct labour 0.5 hours at $2 per foot at $12 per hour

The following table shows the planned inventory levels of the company: Raw material Finished goods

Beginning balance Ending balance Beginning balance Ending balance March 288 324 80 100 April 324 408 100 120 May 408 468 120 160 June 468 474 160 150 July 474 484 150 170 August 484 502 170 150 Expected unit sales (number of frames) for the following months:

March 275 April 250 May 300 June 400 July 375 August 425

The company usually use a single application rate of $0.30 per unit produced for variable manufacturing overhead. General manager predicts that the annual fixed manufacturing overhead will be approximately $7,200 for the coming year. Expected monthly expenses of selling and administrative are estimated $650 per month plus $0.60 per unit sold. Required: Part 1. Prepare the following for SouthWonder for the second quarter (April, May, and June). Include each month as well as the second quarter total for each budget. a. Sales budget. [5 marks] Click or tap here to enter text.

b. Production budget. [5 marks]

Click or tap here to enter text.

c. Direct materials purchases budget in units and dollar amount. [5 marks] Click or tap here to enter text.

d. Direct labor budget in hours and dollar amount. [5 marks] Click or tap here to enter text.

e. Manufacturing overhead budget. [5 marks] Click or tap here to enter text.

Part 2. Suppose that the company had $10,800 cash at bank at the beginning of the second quarter. Cash sales average 80 per cent of total sales (refer to your answer to part a). Credit sales are collected 50 per cent in the month of sale and 50 per cent in the month following sale. Prepare budgeted cash receipts. Include each month (April to June) as well as quarter 2 totals. [5 marks]