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Banisco Bangladesh produces cookies for resale at grocery stores throughout Bangladesh. The company is currently in the process of establishing a master budget on a quarterly basis for this coming fiscal year, which ends December 31, 2021

Note: As the management accountant you have to prepare the budget FY 2021 (on a quarterly basis).

Prior year quarterly sales were as follows:

------First quarter 68700 units

------Second quarter 78900 units

------Third quarter 96300 units

------Fourth quarter 83500 units

Sales quantity of each quarter are expected to increase by 20 percent compared to those of the previous year, and each unit is expected to sell for BDT 9. The management prefers to maintain ending finished goods inventory equal to 10 percent of next quarters sales. Assume finished goods inventory at the end of the fourth quarter budget period is estimated to be 9000 units and ending inventory Dec 31, 2020 is 7000 units.

Requirements:

(i) Prepare a sales budget for Banisco Bangladesh.

(ii) Prepare a production budget for Banisco Bangladesh.

Banisco Bangladesh, now intends to prepare the budget for direct materials purchases, direct labor, and manufacturing overhead.

Each unit of product requires 2.0 pounds of direct materials per unit, and the cost of direct materials is BDT 3 per pound. Management prefers to maintain ending raw materials inventory equal to 30 percent of next quarters materials needed in production. Assume raw materials inventory at the end of the fourth quarter budget period is estimated to be 39300 pounds and ending inventory as on December 31, 2020 is 36100 pounds. Each unit of product requires 0.2 direct labor hours at a cost of BDT 10 per hour.

Variable overhead costs are:

------Indirect materials BDT 0.30000000000000004 per unit

------Indirect labor BDT 0.1 per unit

------Other BDT 0.35000000000000003 per unit

Fixed overhead costs each quarter are:

------Salaries BDT 26100

------Rent BDT 22000

------Depreciation BDT 22000

Requirements:

(iii) Prepare a direct material purchases budget for Banisco Bangladesh.

(iv) Prepare a direct labour budget for Banisco Bangladesh.

(v) Prepare a manufacturing overhead budget for Banisco Bangladesh.

Banisco Bangladesh estimates that all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year are

------Salaries BDT 14900

------Rent BDT 54000

------Advertising BDT 6700

------Depreciation BDT 8030

------Other BDT 810

Requirements:

(vi) Prepare a selling and administrative budget for Banisco Bangladesh.

(vii) Prepare a budgeted income statement for Banisco Bangladesh.

The company plans to purchase selling and administrative equipment totalling BDT 19900 and production equipment totalling BDT 27000. Both will be purchased at the end of the fourth quarter and will not affect depreciation expense for the coming year. All sales are on credit. The company expects to collect 50 percent of sales in the quarter of sale, 30 percent of sales in the quarter following the sale, and 20 percent will not be collected (bad debts). Accounts receivable at the end of last year totalled BDT 199000, all of which will be collected in the first quarter of this coming year. All direct materials purchases are on credit. The company expects to pay 70 percent of purchases in the quarter of purchase and rest in the following quarter. Accounts payable at the end of last year totalled BDT 4400, all of which will be paid in the first quarter of this coming year. The cash balance at the end of last year totaled BDT 18000.

Requirements:

(viii) Prepare a cash budget for Banisco Bangladesh.

(ix) The COO (chief operating officer) of Banisco emphasised that any surplus amount of cash must be used to pay off previously borrowed money. In contrast, the CMO (chief marketing officer) argued that doing such would not fulfil our minimum cash balance target at the end of each month/quarter. Do you agree with CMO? Why or why not? What will be the optimum solution?

The following account balances are expected at the end of the fourth quarter:

------Property, plant, and equipment (net): BDT 306000

------Common stock: BDT 431000

Retained earnings at the end of last year totalled BDT 54440 and no cash dividends are anticipated for the budget period ending December 31, 2020.

Requirements:

(x) Prepare the Assets and Liabilities sections of the budgeted balance sheet for Banisco Bangladesh (You dont need to prepare the complete balance sheet, but only the Assets and Liabilities Sections).