Samarinda Corporation manufactures and sells plastic cleaning machine tyres. It is finalising its financial plans for 2022 and requires help with budgeting. The following details are available:

Samarinda Corporation

Balance Sheet

31 December 2022

Assets Current assets: Cash Account Receivables (net) Property, plant and equipment: Land Buildings and equipment Less accumulated equipment Total assets	RM350,000 (118,000)	RM200,000 294,000 RM100,500 232,000	RM494,000 332,500 RM826,500
Liabilities and Stockholders' Equity Current liabilities: Accounts payable Stockholders' equity: Capital stock Retained earnings Total liabilities and stockholders' equity		RM400,000 294,500	RM132,000 694,500 RM826,500

The selling price for each wheel is RM30 per unit. Budgeted sales units for 2023 are:

First quarter	15,000
Second quarter	16,000
Third quarter	18,000

Samarinda Corporation will have no inventories of finished goods (wheels) and raw materials (plastic and rims) at the start of the year. The management desires to have 5,000 kgs of plastic at the end of the first quarter and 6,000 kgs at the end of the second quarter. Each wheel requires 2 kgs of plastic. At the end of the first quarter, Samarinda Corporation should have 2,000 units of rims, and at the end of the second quarter, they should have 2,500 units. Inventory should consist of 1,000 units of wheels at the end of the first quarter and 1,500 wheels at the end of the second quarter.

	Direct Materials	Direct Labour
Plastic	2kg @ RM3	0.5 hour
Rims	1 each @ RM2

Variable factory overheads are applied at a rate of RM3 per hour of direct labour for each completed unit. These costs are allocated based on the total number of completed units, and direct labour costs average RM20 per hour. Fixed factory overhead costs are RM170,000 per quarter, including non-cash expenditures of RM54,000.

Required:

For the first quarter of 2023, prepare the following:

Sales budget. (2 marks)

Production budget in units. (5 marks)

Direct materials usage and purchase budget (Plastic and Rims). (12 marks)

Direct labour budget. (2 marks)

Task 1b:

Question

Additional information on Samarinda Corporation above follows:

All sales are on credit and are collected 30 percent in the quarter of sale and 70 percent in the quarter following the sale. The company has a history of no bad debts. The sale from the last quarter of 2021 were RM420,000.

Purchases of direct materials are paid for in the quarter acquired; direct labour costs are paid in the quarter incurred.

Overhead expenses are paid in the next quarter.

The accounts payable on the balance sheet are for overhead expenses from the last quarter of 2022.

Selling and administrative expenses are paid in the quarter incurred. The total is RM40,000 per quarter, including RM10,000 in depreciation.

Required:

Refer to the sales budget prepared in Task 1a. Construct a cash budget for Samarinda Corporation for the first and second quarter of 2023.