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Taku-Tau Ltd managements provided you with the following information to prepare the annual budgets. Statement of Financial position (extract) as at 31 June 2020. of
Taku-Tau Ltd managements provided you with the following information to prepare the annual budgets. Statement of Financial position (extract) as at 31 June 2020. of 3 stion Net Non-current assets NS 240 000 Inventory- Raw materials 287 640 Work in progress 145 000 Finished goods 441 000 Receivables 225 000 Cash & cash equivalents 72 000 Share capital Retained income Payables 600 000 648 640 162.000 The basis on which budgets are prepared: Quarterly sales estimates in units 3rd quarter of 2020 quarter of 2020 1st quarter of 2020 Selling price per unit NS125 Inventory policies 15.000 12 000 12 000 Finished goods -30% of the following quarter's demand must be in stock at the end of each quarter Direct material -40% of the following quarter's demand must be in stock at the end of each quarter Manufacturing costs (per unit) 2kg material A 1ko material B NS 36 15 2kg material A 1kg material B Direct labour (2 hours) 36 15 24 Variable overheads (varies with labour hours) 16 Fixed overheads (based on a normal monthly 7 activity of 5 000 units) Administrative and marketing costs: Advertisements Commission Administrative NS12 000 per quarter N56.25 per unit N590 000 per quarter Cash payment policy: All direct materials are purchased on credit. 65% of these purchases are paid during the quarter in which they are made, and the rest is paid during the following quarter. All other payments are made as the expenses occur Experience of debtors' collections: 25% of the sales are cash sales and the rest is sales on credit. 50% of the credit sales are paid during the month in which the sales occur and the rest during the following month (assume equal monthly sales in each quarter). Additional information: . Prices, costs and the manufacturing process remain unchanged. Income tax rate: 50% Depreciation is provided for at 20% per annum on the reducing balance method and is included in the fixed manufacturing overheads The company is planning to purchase and install new equipment to the value of NS10 000 at the end of September 2020 The value of the work in progress remains unchanged during the year. Variances in production costs are written off against the cost of sales and inventories are always valued at standard costs. Required: Calculate the total value needed for material A to be bought to manufacture production units for the 3 quarter. NB: You are not required to enter the unit method or currency symbol
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