Question 4 (20 marks) Better Manufacturing Company (BMC) makes a component identified as B7. The company maintains minimum inventories due to negotiation of a new long term contract with its materials suppliers. Selected budget data for 2017 is presented below: Requirements for each finished component B7: Direct Material Direct Labour 10 k 2 hours $150 12,000 units Product Information for B7: Sales Price (per unit Expected Sales 9,000 units 10,200 units 11100 units 1/30th of next month's sales requirements** June August Desired Ending inventory B7 Direct Materials Information: $2.00 3,000 3% of next month's production requirements $20 per hour Cost per K Opening inventory (kg Desired ending invento Direct Labour: this inventory policy has been followed in the previous two months. BMC uses direct labour hours to allocate overhead. Each year the company determines the budgeted allocation rate for the year based on the budgeted production for the year The annual budgeted production for 2017 is 120,000 units and the total fixed and variable overhead costs budgeted for that level are $336,000 and $129,600 respectively. The fixed overhead includes $91,000 of depreciation. BMC expects the cost per unit for both beginning and ending finished goods inventories to be identical Required: (a) Prepare the following budgets for BMC for May and June 2017: (i) Production Budget (ii) Direct Materials Purchases Budget (4 marks) (5 markS) (b) You have been provided with the following additional information All sales are made on credit. Customers pay 60% in the month of sale; 40 % in the month following the sale April sales were 10,000 units, and 101,220 kgs of materials were purchased Assume that materials are paid 50% in the month purchased and 50% in the following month Labour and relevant overhead costs are paid in the month the liability is . . The opening cash balance at 1t May was $5,000 Prepare the Cash Budget for May 2017 based on the information you have available (8 marks) (c) Explain the value of responsibility accounting in large organisations