QUESTION

BirkinsjayaSdn. Bhd. is preparing budgets for the quarter ending September 30. Related information

is shown as below:

1. Budgeted sales for the next few months are:

Month

Units

May

15,000

June

20,000

July

30,000

August

40,000

September

50,000

October

35,000

November

25,000

2. The selling price is RM12 per unit.

3. All sales are on credit and the collection methods are:

i. 50% collected in the month of sales

ii. 30% collected in the month following sales

iii. 20% collected in two month following sales

4. The management atBirkinsjayaSdn. Bhd. determines the ending inventory in units to be equal to

20% of the following month's budgeted sales.

5. To produce one unit of output, 2 kilograms of direct material are needed.

6.Birkinsjayadecides to have direct materials on hand at 10,000 kilograms every month

7. Cost of direct material is estimated at RM1.50 per kg.

8. The payment of direct materials is below:

i. 50% purchasesispaid in the month of purchase

ii. 50% purchases is paid in the following month of purchase

9. To produce one unit of output, 0.1 hours of direct labour are required.

10.Birkinsjayapays RM8 per hour to its direct labour.

11. All wages are paid at the end of the month.

12. Manufacturing is divided into variable and fixed overhead.

13. Variable overhead is applied to each unit of output based on direct labour hours.

14. The variable overhead rate is RM10 per direct labour hour.

15. Fixed overhead is estimated at RM40,000 per month.

16. Ending finished goods inventory is made up from direct material, direct labour and

manufacturing overhead.

17. Cost of Goods Sold is computed based on the unit production cost of RM5.79 per unit.

18. Selling and administrative cost is divided into variable and fixed components.

19. Variable selling and administrative cost is estimated at RM1.50 per unit sold.

20. Fixed selling and administrative cost is estimated at RM50,000 per month, where RM5,000 is the

depreciation and it is not a cash expense.

21.Birkinsjayahas the following cashpolicy :

i. Minimum cash balance of RM50,000 is required for every month.

ii. Any deficiency of cash will be covered by loans with repayment in the following month.

iii. The interest on loan is charged at 15% per year.

iv. Purchased an equipment in August totalling RM150,000.

v. Cash balance on 1 July is RM55,000.

22.Birkinsjaya'saccount balances are as follows:

RM

Property458,047.50

Equipment150,200 (net)

Ordinary Shares500,000

Retained earnings335,777.50

Required:

To prepare the master budget (sales budget up to budgeted Statement of Financial Position) for

BirkinsjayaSdn. Bhd. for July, August and September.