Subject: ACACT202A - Management Accounting Company Background Compost-2U Pty Limited is a privately owned company that manufacturers and distributes compost bins. The company has a reputation as one of the market leaders in innovation and product development. Budget Data Direct Manufacturing Costs Direct Materials used $385,000 Direct Manufacturing Labour $265,000 Direct Materials Purchased $185,000 Desired Ending Inventories Direct Materials $347,833 Finished goods $649,300 Manufacturing Overhead Costs Variable Costs $80,000 Factory Depreciation $85,300 Factory Supervision $40,000 Factory Power costs $57,000 Factory Maintenance Costs $80,000 Non-Manufacturing Operating Costs Product Design $24,000 Marketing $38,000 Distribution $76,000 Planned Data - Financial Minimum quarterly cash balance $250,000 Interest rate per annum 12% Income Tax 40% The business wants to minimise the amount of borrowing and they also have a special arrangement with the bank to pay interest at the time of paying principal. O TAFE NSW Higher Education Semester 1, 2022 Page 2 off 5Subject: ACACT202A - Management Accounting Planning Data - Sales Quarters 1 2 3 4 Total Budgeted Revenues $500,000 $445,000 $455,000 $475,000 $1,875,000 Compost-2U Pty Limited Balance Sheet 30 June 2020 Assets Current Assets Cash $250,000 Accounts receivable $195,800 Direct Materials Inventory $289,000 Finished Goods Inventory $558,500 $1,293,300 Property, plant and equipment: Land $485,000 Building and equipment $498,000 Accumulated depreciation $49,800 $448,200 $933,200 Total $2,226,500 Liabilities and shareholders equity Current Liabilities Accounts payable $399,600 Income taxes payable $119,500 $519,100 Shareholders Equity Ordinary shares 25,000 shares outstanding $800,000 Retained earnings $907,400 $1,707,400 Total $2,226,500 Budgeted Cash Flows for 2021 Quarters 1 2 3 4 Disbursements Direct Materials $31,400 $36,697 $67,900 $42,033 Payroll $188,000 $132,300 $172,000 $108,000 Manufacturing Overhead Costs $85,300 $96,640 $75,800 $65,136 Non-manufacturing costs $27,500 $29,000 $38,260 $45,000 Machinery purchase $355,000 Income Taxes $119,500 $45,000 $45,000 $45,000 @ TAFE NSW Higher Education Semester 1, 2022 Page 3 of 5Subject: ACACT202A - Management Accounting Accounts receivable cash collections . 80% of all sales made in the quarter are collected in the same quarter 20% are collected in the following quarter Part 1: Prepare Financial Budgets (70 Marks) You have just joined the company as the Assistant Management Accountant and have been provided with the above Budget Data. Required: Prepare a cash budget for 2021 by quarter. That is, prepare a statement of cash receipts and disbursements by quarter, including details of borrowing, repayment and interest. . Prepare a Cost of Goods Sold Schedule for the year ending 30 June 2021. . Prepare a budgeted income statement for the year ending 30 June 2021. This statement should include interest expense and income taxes (at a rate of 40% of operating income). . Prepare a budgeted balance sheet as at 30 June 2021