Section B Question No. 02 - Compulsory Live Lid produces two products namely as R and N. You are given following information 1) Budgeted direct cost per unit for two products for the year 2017 are as follows. Rs. 400 500 450 Material A-2 Kg at Rs.200 per kg 2.5 Kg at Rs.200 per kg Material B - 1.5 Kg at Rs. 300 per kg 2 Kg at Rs. 300 per kg Direct Labour - 3 hours at Rs. 600 per hour 2 hours at Rs. 600 per hour 600 1800 1200 2) Production overhead is made up as follows: Rs. 2 Kg at Rs 300 per kg Direct Labour - 3 hours at Rs. 600 per hour 2 hours at Rs. 600 per hour 1200 2) Production overhead is made up as follows: Rs. Electricity 10,000 Depreciation 20,000 Miscellaneous 120,000 150,000 Production overhead cost is absorbed into products using a direct labour hour absorption rate. 3) Sales The sales director has forecasted that sales of Rand N will be 6,000 and 2,000 units. respectively, during the year 2017. The selling prices will be: R Rs. 3,500 N Rs. 3,900 4) Selling and distribution expense for the year amounts to Rs. 100,000 and it includes a depreciation of Rs. 20,000 5) Corporate tax is charged at the rate of 30% per annum. 6) Inventory - Finished good inventory to be as follows: Opening inventory (as at 19 January 2017) - Product R Product N Closing inventory (as at 31 December 2017) Product R Product N 1000 units 300 units 1500 units 500 units Raw material inventories Opening inventory - Material A Material B Closing inventory - Material A Material B 2,500 Kg 2,000 Kg 2,000 Kg 2,500 Kg Quarter 3 7) Hudgeted cash flows for four quarters of 2017 is as follows. Quarter Quarter 2 Rs. 7,000,000 9,000,000 6,000,000 6,000,000 750,000 Receipts Sales revenue Machine disposal Payments Materials Direct wages 1.900,000 3.585,000 1,400,000 3,585,000 4.000 2,500,500 3,585,000 2.000 1,510,000 3.585,000 1.000 500 Electricity 50,000 15.000 25,000 30,000 1.200,000 20,000 20,000 20,000 20,000 Other production overhead Machine purchase Selling and distribution expenses Taxation 10,000 8 Book value of the machine disposed was Rs. 1,000,000 and it had an accumulated Budgeted Balance sheet as at 01 January 2017 Cast Ace. Dep NBV Non-Carent Assers Land 4,000,000 Building and Equipment 6.000.000 650.000 650.000 4.000.000 5,350,000 9,350.000 10.000.000 Current Assets Inventories Raw material 500,000 600.000 1,100,000 Finished goods 2,371,136 986,948 3,358,084 9.500.000 Receivables 13.958.084 23,308,084 Total Assets 2,308.084 Current Liabilities Payables Accrued electricity Taxation 3,000 10,000 Cash at bank 100.000 2,421,084 Noncurrent liability 15 year Bank loan 5,887,000 Equity Share Capital Retained earnings Total equity and Liability 13,000,000 2,000,000 15,000,000 23,308,084 You are required to prepare following budgets: 2. Sales budget b. Production budget C. Material usage budget d. Material purchase budget e. Labour budget f. Production overhead budget g. Production cost budget h. Cash budget Yi. Budgeted Income statement and Balance Sheet