QUESTION You are an accountant at Sepang Bikes Company, Sepang Bikes Company is a manufacturer of rugged bikes The marketing manager expects an increase in sales of rugged bikes due to the success ongoing advertising campaigns So the management asks you provide a master budget taking into account the increase in sales In order to prepare a budget, information must first be gathered from various sources such as selling price, expenses involved, cost of raw materials and so on The following is information that has been collected 1 The estimated sales are 100,000 units of rugged bikes with a price of RM800 per unit 2 According to accounting records, the initial stock balance is 2,500 for bicycles with a unit cost of RM454 75, With the increase in sales then the management sets the final balance of the stock is 3,500 units 3 Initial balance of direct raw materials RM Wheels and tires 20,000 components 70,000 frames 50,000 Total 140,000 4 Cost per unit of direct material is expected RM Wheels and tires 20 components 70 frames 50 5 The manager wants the final inventory RM Wheels and tires 25,000 components 87,500 frames 62,500 Total 175,000 6 Quantity and direct labor cost per unit is expected to Labour Hour Cost per hour Installation 1 5 RM25 Test 0 15 RM15 7 For overhead, you use information you gathered from last years operations and update with current prices Production overhead costs per unit are expected as follows Overhead changes (cost per unit) RM Supply 20 00 Indirect labour 37 50 Maintenance 10 00 Other 7 50 Total 75 00 8 You expect a total of RM20,200,000 to be spent on manufacturing overhead costs remains as follows Depreciation of RM4,04,000 Property tax 1,010,000 Insurance 1,414,000 Factory supervisor RM5,050,000 Fringe benefits RM7,070,000 Other RM1,616,000 Overhead costs are absorbed by the amount of production spent 9 You also estimate the operating costs for the support department These costs are fixed costs Administrative costs RM16,478,215 Promotion RM9,886,929 delivery RM4,943,465 customer service RM1,647,821 10 Income tax is expected at the rate of 30 You as an accountant are required to provide a The following budgets i Sales budget ii Production budget iii Budget of direct raw materials used as well as purchase budget iv Direct labor budget v Factory overhead budget vi Final stock budget vii Budget the cost of sales items viii Budget support department ix Income Statement Budget (32 marks)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 10, 2024

QUESTION You are an accountant at Sepang Bikes Company, Sepang Bikes Company is a manufacturer of rugged bikes. The marketing manager expects an increase in

QUESTION You are an accountant at Sepang Bikes Company, Sepang Bikes Company is a manufacturer of rugged bikes. The marketing manager expects an increase in sales of rugged bikes due to the success ongoing advertising campaigns. So the management asks you provide a master budget taking into account the increase in sales. In order to prepare a budget, information must first be gathered from various sources such as selling price, expenses involved, cost of raw materials and so on. The following is information that has been collected: 1. The estimated sales are 100,000 units of rugged bikes with a price of RM800 per unit. 2. According to accounting records, the initial stock balance is 2,500 for bicycles with a unit cost of RM454.75, With the increase in sales then the management sets the final balance of the stock is 3,500 units. 3. Initial balance of direct raw materials:

	RM
Wheels and tires	20,000
components	70,000
frames	50,000
Total	140,000

4. Cost per unit of direct material is expected:

	RM
Wheels and tires	20
components	70
frames	50

5. The manager wants the final inventory:

	RM
Wheels and tires	25,000
components	87,500
frames	62,500
Total	175,000

6. Quantity and direct labor cost per unit is expected to:

*Labour*	*Hour*	*Cost per hour*
Installation	1.5	RM25
Test	0.15	RM15

7. For overhead, you use information you gathered from last years operations and update with current prices. Production overhead costs per unit are expected as follows: Overhead changes (cost per unit):

	RM
Supply	20.00
Indirect labour	37.50
Maintenance	10.00
Other	7.50
Total	75.00

8. You expect a total of RM20,200,000 to be spent on manufacturing overhead costs remains as follows: Depreciation of RM4,04,000 Property tax: 1,010,000 Insurance: 1,414,000 Factory supervisor RM5,050,000 Fringe benefits: RM7,070,000 Other: RM1,616,000 Overhead costs are absorbed by the amount of production spent. 9. You also estimate the operating costs for the support department. These costs are fixed costs: Administrative costs: RM16,478,215 Promotion: RM9,886,929 delivery: RM4,943,465 customer service: RM1,647,821 10. Income tax is expected at the rate of 30%. You as an accountant are required to provide: a. The following budgets: i. Sales budget ii. Production budget iii. Budget of direct raw materials used as well as purchase budget. iv. Direct labor budget v. Factory overhead budget vi. Final stock budget vii. Budget the cost of sales items viii. Budget support department ix. Income Statement Budget (32 marks)