TPL has offered your group to assist in preparing monthly budget for the first quarter of year 2022. The organisation follows an accounting year that starts from 1st of January to 31 of December. The accounting department has supplied the following data for one of the automotive cleaning products. The budgeted sales volume starting from December 2021 to May 2022 is presented below: Month Volume Month Volume December 2021 32,000 March 42,000 January 2022 26,000 April 46,000 February 36,000 May 38,000 The management accountant at TPL has summarised inventory balances as follows. a. The desired ending finished goods inventory for each month is 20% of the next month's sales units. b. Standard direct material (Raw Mat.) requirements and costs for each part are as follows: 

Direct materials Quantity Cost per Kg. Raw Mat. -A 2 Kg $2.40 Raw Mat. -B 3 3.10 BBAC501 Management Accounting - Assignment Term 2 2021 Page 3 of 5 TPL's direct materials inventory policy indicates that the firm keeps ending raw materials inventory that is equal to 20% of Raw Mat-A and 25% of Raw Mat-B to the production requirements of the following month. c. The production of one unit is estimated to take one and half hours of direct labour at an hourly pay rate of $20. d. TPL uses flexible budget formula and the estimated monthly overhead costs are presented below. The company uses direct labour hours as cost driver for manufacturing overhead costs. Overhead cost Fixed Variable Supplies - $ 1.20 Power - 1.10 Maintenance $18,000 0.60 Supervision 20,000 - Depreciation 96,000 - Taxes 22,400 - Other 42,000 2.30 e. Budget estimates for selling and administrative expenses are made monthly using a flexible budgeting formula and taking sales volume as a cost driver. Fixed costs Variable costs Supplies $52,000 - Sales commission - $1.80 Depreciation expense 40,800 - Shipping expenses - 1.40 Other expenses 25,000 0.70 f. Budgeted sales price per cleaning product is $85. g. Sales are collected 60% in the month of sales and 40% in the month following sales. All purchases are made in cash and the company gets a discount of 2%. The cash balance on 1 January 2022 is estimated to be $102,000. The company borrows money when it faces cash shortages each month. The loan agreement signed with a local Bank stipulates that money is borrowed in multiples of $2,000 at an interest rate of 8%. The company makes repayment on loans when it has cash surplus. Required: Part - A: Prepare a monthly operating budget for the first quarter (January-March) of 2022 (assuming the company operates from January 1st to December 31st of each year) including the quarterly total for each of the first eight schedules: (15 Marks) 

1. Sales budget 1 marks 

2. Production budget 1.5 marks 

3. Direct material purchases budget 2 marks BBAC501 Management Accounting - Assignment Term 2 2021 Page 4 of 5 

4. Direct labour budget 1.5 marks 

5. Overhead cost budget 1.5 marks 

6. Selling and administrative expense budget 1.5 marks 

7. Cost of goods sold budget 2 marks 

8. Budgeted income statement 2 marks 

9. Budgeted cash balance only for the month ending 31st of January. (Hence: you need to prepare detailed cash budget only for the month of January). 2 marks