Task 1a: CLO3

OBJECTIVE: The purpose of this assignment is to enable learners to understand an organisations financial goals through the preparation of operating, financial, and cash budgets that together integrate into a business plan

REQUIREMENT: Budgets and Budgetary Controls

Question

Alya Sdn Bhd. produces and sells granite pots and pans with glass lids to a Japanese company. Rushdi, the new manager, wants to keep an eye on the quarterly budgets for the third quarter ending 30 September 2023 to ensure that the sales targets can be met despite the current economic situation. As a result, the following data is available:

Budgeted sales:
POTS 60,000 units @$100 each	PANS 40,000 units @$125 each
Budgeted inventories:
	Beginning	Ending
Pots Pans Direct material (Granite) Direct material (Glass) Direct material (Handles)	20,000 8,000 32,000 kg 29,000 kg 6,000 units	25,000 10,000 36,000 kg 32,000 kg 7,000 units

Standard variable costs:

	POTS		PANS
Direct materials: Granite Glass Handles Total materials	5kg @$8.00 3kg @$5.00 1 @$3.00	$40.00 15.00 3.00 58.00	4kg@$8.00 3kg@$5.00	$32.00 15.00 47.00
Direct labour Variable manufacturing overhead Total	2 hours @ $12.00 2 hours @ $1.50	24.00 3.00 85.00	3 hours @ $16.00 3 hours @ $1.50	48.00 4.50 99.50

Variable manufacturing overhead costs are $384,000 per quarter, while fixed factory overhead costs are $214,000 per quarter (including non-cash expenses of $156,000) and are allocated based on total units produced.

Following is some financial information:

• The initial cash balance is $1.8 million.
• Sales are made on credit, with 50% collected in the current period and the remainder in the following period. The previous quarters sales totalled $8,400,000. There are no outstanding debts.
• Purchases of direct materials and labour costs are paid for in the quarter in which they are made.
• Manufacturing overhead expenses are paid in the quarter in which they are incurred.
• All selling and administrative expenses are fixed and paid in the quarter in which they are incurred. They are budgeted at $340,000 per quarter, including depreciation of $90,000.

Required:

Prepare the following for the third quarter ending 30 September 2023:

1. Sales budget
   1. marks)
2. Production budget in units

(3 marks)

1. Direct materials usage and purchase budget (Granite, Glass & Handles)

(8 marks) d) Direct labour budget

1. marks)

(Total 14 marks)

Task 1b: CLO3

Question

Following is some financial information:

• The initial cash balance is $1.8 million.
• Sales are made on credit, with 50% collected in the current period and the remainder in the following period. The previous quarters sales totalled $8,400,000. There are no outstanding debts.
• Purchases of direct materials and labour costs are paid for in the quarter in which they are made.
• Manufacturing overhead expenses are paid in the quarter in which they are incurred.
• All selling and administrative expenses are fixed and paid in the quarter in which they are incurred. They are budgeted at $340,000 per quarter, including depreciation of $90,000.

Required:

Refer to the sales budget prepared in Task 1. Construct a cash budget for Alya Sdn. Bhd. for the third quarter ending 30 September 2023.

(8 marks)

(Total 8 marks