Question

Pedro Sdn Bhd. manufactures and sells two cookware products in a single plant. The new manager wants to have quarterly budgets and has prepared the following information for the first quarter of 2021. The following information is available:

Budgeted sales:

Product A .60,000 units @RM100 each

Product B .40,000 units @RM125 each

Budgeted inventories:

	Beginning	Ending
Product A Product B Direct material (Metal) Direct material (Plastic) Direct material (Handles)	20,000 8,000 32,000 kg 29,000 kg 6,000 units	25,000 10,000 36,000 kg 32,000 kg 7,000 units

Standard variable costs:

	Product A		Product B
Direct materials: Metal Plastic Handles Total materials	5kg @RM8.00 3kg@RM5.00 1 unit @RM3.00	RM40.00 15.00 3.00 58.00	4kg @RM8.00 3kg@RM5.00	RM32.00 15.00 47.00
Direct labour Variable manufacturing overhead Total	2hours@RM12.00 2hours@RM1.50	24.00 3.00 85.00	3hours@RM16.00 3hours@RM1.50	48.00 4.50 99.50

Variable manufacturing overhead cost is RM384,000 while fixed factory overhead is RM214,000 per quarter (including non-cash expenditure of RM156,000) and is allocated on total units produced.

Financial information are as follows:

• Beginning cash balance is RM1,800,000
• Sales are on credit and are collected 50 percent in the current period and the remainder in the next period. Last quarters sales were RM8,400,000. There are no bad debts.
• Purchases of direct materials and labour costs are paid for in the quarter acquired.
• Manufacturing overhead expenses are paid in the quarter incurred.
• Selling and administrative expenses are all fixed and are paid in the quarter incurred. They are budgeted at RM340,000 per quarter, including RM90,000 of depreciation.

Required:

For the first quarter of 2021, prepare the following:

1. Sales budget. (2 marks)
2. Production budget in units. (5 marks)
3. Direct materials usage and purchase budget (Metal, Plastic, Handles). (12 marks)
4. Direct labour budget. (2 marks)