Question 3 (October 2018)

Dyson Company Malaysia manufactures the cyclonic vacuum cleaner which us to be sold in Asia for RM2,000 per vacuum. The following information is in relation to the budgeted production and sales of cyclonic vacuum cleaners for the last quarter of 2017.

1. Budgeted sales in units:

July 10,000

August 12,000

September 14,000

October 13,500

November 13,800

December 14,500

60% of the sales will be collected one month after sales.

30% of the sales will be collected two months after sales.

10% of the sales will be collected three months after sales.

2. Variable production cost per vacuum:

RM

Direct materials 30.00

Direct labour 21.00

Overhead 16.00

3. Budgeted production in units:

August 12,000

September 14,000

October 13,500

November 13,800

December 14,500

4. It is the company policy to pay creditors for material two months after purchases are made.

5. Wages and variable overhead are paid within the month they are incurred.

6. Sales commission are 8% on sales and are to be paid one month after sales are made.

7. Fixed overhead is RM210,000 per month, which includes depreciation of RM65,000.

8.Fixed selling and administration is RM72,000 per month which is payable in the month

it is incurred.

9. One of the old machines will be sold for RM12,000 in the month of November and a new machine will be replace it in the same month at a cost of RM78,000.

10. The company will pay dividends which was declared at RM100,000 at the end of December.

11. It is expected that the cash balance on 30th September will be RM80,000.

Required:

(a) Prepare a schedule of expected cash collections from customer for the last quarter of 2017.

(b) Prepare schedule for payment of materials for the last quarter of 2017.

(c) Prepare a cash budget for the last quarter of 2017.