QUESTION PART B (50 marks)

Zuus Ltd manufactures the KF94 facial mask. Below are the information that could assist the budget for 2023. The company is expected to produce 100,000 boxes for distribution across pharmacies in Selangor, Malaysia.

Cost element	Quantity	Unit cost (RM)
Direct materials	2 kg	5
Direct labour	2 hours	7
Manufacturing overhead	2 hours	7.50

Below are other relevant information

Items	RM
Sales	5,000,000
Selling and administrative expenses	200,000
Interest expense	200,000
Income tax expense	80,000

Zuus Ltd expected volume of sales for the first 2 months in business from 1 January to 28 February 2023 is as follows:

	January	February
Volume	12,000 boxes	14,000 boxes

The company sells their product for both cash and credit terms and estimates that 20 per cent of all sales will be for cash and the remainder will be on credit terms. Research has shown that on average, 60 per cent of trade debtors pay in the month following the month of sale and 40 per cent in the second month following the month of sale. Units will be bought in the month of sale and paid for in the following month. It is expected that expenses will be incurred at the rate of RM33,000 per month, half of which will be paid for in the following month.

Required:

A)Critically evaluate the budgeted income statement for the year ending 31 December 2023. Ensure to calculate the selling price, total unit cost in the working.

10marks)

B)Critically evaluate the budgeted cash flows for January and February 2023 respectively.

(10 marks)

CYou are the General Manager of the Finance Department at Zuus Ltd. Critically describe to the Board of Directors on the following. Support your discussion with reference to literature.

I)Use of Budgets as a mean of planning and controlling various business activities.

(15 marks)

Ii)TWO (2) perspectives from the Balanced Scorecard to evaluate Zuus Ltd business performance.

(15 marks)