The purpose of this term paper is to make bridge between the theoretical contents taught in this course with real-world practice. The term report should be submitted in a group and each group should comprise of 3-5 members. Read the following case and prepare the required budgets.

Hong Bao dim sum is a new startup by fresh graduates from NSU who home deliver Dim Sums across Dhaka. They make dim sums using locally produced flour, yeast, chicken and all the other fresh ingredients of finest quality. They have two dim sums: the standard one Steamed Chicken dim sum and the customized one named Fried dim sum. The standard dim sums are prepared with antibiotic-free chicken along with other ingredients and the customized dim sums add number of options that are customized as per customer demand and are deep-fried.

For the second quarter of 2021, estimated sales in units for each product line are as follows:

Month Standard (in plates) Customized (in plates)

April 1,000 350

May 1,150 400

June 1,200 450

July 1,560 500

August 1,800 550

The CEO of the Hong Bao Dim Sum provided you with the following additional information:

Sales: The actual sales for February and the forecasted sales for March were Tk. 1,050,000 and Tk.

1,200,000 respectively for the standard units. The relevant numbers for the customized ones are Tk.

500,000 in February and Tk. 650,000 in March.

Hong Bao dim sum prices the standard dim sums at Tk. 400 per plate of 8 pcs and Tk. 800 per plate of 8 pcs.

Inventory Policy: The Company believes in customer satisfaction and therefore doesnt store any ready products. Rather theyre using lean production process where theyre producing on demand. Production requirements: The standard dim sums require 250 gm of chicken per plate and the customized ones require 350 gm of chicken. Chicken costs Tk. 380 per Kg. The cost of all other material is Tk. 120 per plate for standard units and Tk.200 for the customized units.

The standard unit requires 0.50 direct labor hours per unit and the customized ones require 0.75 hours of labor time. Labor cost per hour is Tk. 200.

Fixed Manufacturing Overhead is expected to be Tk. 60,000 per month, of which Tk. 22,000 for non-cash

depreciation. Hong Bao applies manufacturing overhead to units based on direct labor hours and the variable manufacturing overhead rate is Tk. 25 per direct labor hours.

Inventory policy-raw materials: Chicken is the main ingredient of Dim Sums. With regard to the chicken used in production, Hong Bao likes to keep safety stock of 50% of its need of chicken for the next months anticipated production. Hong Bao ended March, 2021 with 186 Kg of meat in stock.

Payables Policy: Hong Bao signed an MOU with Bengal Meat where Bengal Meat agrees to supply all the meat needs on credit. According to the credit policy of Bengal meat for Hong Bao, half of the monthly purchase is due on the month of purchase and the rest of the due is settled in following month of purchase. Accounts payable for materials and other items were expected to be Tk. 105,000 on March 31, 2021.

Costs of all other materials are purchased on a cash basis during the month of purchase according to the monthly production need.

Collection policy: Hong Bao mainly delivers their products to corporate offices, hence offering credit term to attract corporates. For both the standard and customized units, 40 percent of any months sales are for cash. 10 percent of the credit sales are collected in the month of sale, 70 percent of credit sales are collected the following month and the rest of the dues are collected in the second month following the month of sales.

Sales and Administration costs: Monthly manufacturing expenses consist of the following:

Salaries and wages: Tk. 75,000

Commissions: 6% of revenue

Rent: Tk. 50,000

Utilities: 4% of revenue

Cash and financing: Hong Bao expects to maintain a minimum cash balance of Tk. 300,000. Borrowing can make up any anticipated cash shortage at 10% annual interest. Bank will only lend (and accept repayments) in Tk. 1000 increments. Cash balance to start the quarter is Tk. 350,000

Other information: Hong Bao will make a payment of Tk. 400,000 during May for equipment purchased on credit on April. The company also plans to pay dividends of Tk. 250,000 in April.

Required:

Prepare the following budgets for Hong Bao Dim Sum for the months of the second quarter ending June,

2021.

i. The sales budget

ii. The production budget

iii. The direct material budget iv. The direct labor budget

v. Manufacturing overhead budget

vi. Ending finished goods inventory budget

vii. Selling and administrative expense budget

viii. The case budget

ix. The budgeted income statement

Prepare the following schedules:

i. Expected cash collections

ii. Expected cash disbursements for materials

General Instructions:

The group leader needs to submit the report in google classroom.

Must show the calculations in MS Excel and the budgets should be formally reported. The final report has to be in PDF format.