Tutorial Q1 (Sales Budget)

A Tokyo Wholesaler was preparing its sales budget for the first quarter of 2020. Forecast sales are:

January 2020 RM180,000

February 2020 RM210,000

March 2020 RM240,000

Sales are 25% cash and 75% on credit. Fifty percent of the credit accounts are collected in the month of sales, 40% in the month following the sales and 10% in the following month. No uncollectible accounts are anticipated. Accounts receivable at the beginning of 2020 are RM80,400 (10% November 2019 credit sales of RM180,000 and 40% of December 2019 credit sales of RM156,000).

Prepare a schedule showing sales and cash collections for January, February and March 2020.

Tutorial Q2 ( Material Budget)

Khilary Sdn. Bhd. produces marble tiles for the local market. The raw materials required to produce 1 sq. meter is 6kg and the cost per kg is RM10. The production requirement for the month of January, February, March and April 2020 are 1,500; 1,800; 2,200 and 2,500 units respectively. The opening stock of raw materials for the month of January 2020 is 5,250kg and the company normally holds the closing stock at the end of each month equals to 25% of the following month raw materials requirement.

Required:

(a) Prepare the Material Purchase Budget in value and quantity for Khilary Sdn. Bhd. for the first quarter of 2020.

(b) Explain FIVE (5) benefits of preparing the Material Purchase Budget.