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Supermax Son Bhd uses a budgeting system to efficiently allocate its available resources. The company manufactures and sells two types of exclusive furniture, known as

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Supermax Son Bhd uses a budgeting system to efficiently allocate its available resources. The company manufactures and sells two types of exclusive furniture, known as Type A and Type B, for local market. Currently the company sells furniture Type A at RM1,700 per unit and Type B at RM900 per unit. However, due to an increase in costs of production, the company plans to increase selling price by 15% for both product starting from next year. The expected monthly sales volume for both product are as follows: Furniture Type A Type B (units) [units) December 2020 1.000 ,500 January 202 1,500 2,000 February 2021 2.500 3.000 March 2021 2,000 2,000 April 2021 2.000 2,000 Each unit of furniture Type A requires 10 meters of direct material and 15 units of indirect material. While each unit of furniture Type B requires 5 meters of direct material and 10 units of indirect material. The company purchased direct material at RM10 per meter and indirect material at RM5 per unit from TingTong Enterprise. Based on past experience, four labour hours are required to produce a unit of furniture Type A and two labour hours are required to produce a unit of fumiture Type B. An employee is currently paid at RM12.00 per hour. To encourage worker's productivity, the company agrees to increase wage rate by 5% starting from February 2017. Inventories at the beginning of December 2020 are expected to be: Products Raw Materials Furniture Type A 200 units Direct Material 1,900 meters Furniture Type B 300 units Indirect Material 3,250 units It is the policy of the company to keep the closing inventories of finished goods at 20% of the following month's sales and the closing inventories of raw material at 10% of the following month's production requirement. Budgeted fixed overhead for the month of December is RM15,000 and is to be absorbed to products based on labour hours. Variable overhead is budgeted at RM10,000 for the month and is to be absorbed based on units sold. Required: Prepare the followings budget for each type of fumiture for the month of December 2020, January and February 2021 for both types of furniture. Production budget Material usage and purchase cost budget ii) Labour costs budget (11 marks)

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