Required:

(a) Compute the following (show workings using a sales budget or other means) : (i) Budgeted Sales Revenue ($) for the month of Aug 2020. (1.5 marks) (ii) Jul sales revenue expected to be collected in the month of Aug 2020. (2 marks) (iii) Expected Total cash collections for the month of Aug 2020. (2 marks) (iv) Expected Total cash collections for the month of Sept 2020. (4.5 marks)

(b) The management of the company provided you with the following extract from the production budget : May June Production (No of units) 25,500 27,500

The company pays the factory manager a salary of $96,000 per annum. The management signed a rental agreement to pay factory rent of $105,000 per quarter. The company estimates that plant electricity is expected to be $7.00 per unit produced. Compute the following (show workings using a manufacturing overhead budget or other means) : (i) Budgeted Variable Overhead for the month Aug 2020. (1.5 marks) (ii) Budgeted Total Overhead for the month of Sept 2020. (3.5 marks) (c) Explain with an appropriate illustration the term budgetary slack. (1 mark)

(d) Joy & Peace sells its products to various countries in the Asian region via its own online website. The company also sources its raw materials from various countries. Production slowdown in these countries has caused materials required by Joy & Peace to be in shortage. You have been tasked to prepare the master budget (ie. all the budgets) for the coming year 2021.

(i) What information, data, assumptions and predictions would you require to prepare the budgets and explain why you need them.

(ii) Recently employees have raised concerns about how budgets are set. They feel that the unrealistic budgets / targets are set by top management and imposed upon them. What can an organisation do to overcome this problem? (8 marks)

QUESTION 2 Joy & Peace Ltd. sells JP-1 at the price of $37 per unit. All sales are on credit basis. Joy & Peace management has provided you with the following sales forecast : Jul Aug Sept Forecasted Sales (No of units) 21,000 23,000 25,000 Joy & Peace expects that 70% of its sales will be collected in the month in which the sales is made and the remaining 30% will be collected 1 month following the sales