You are provided with the following information for Al Kalood Co. Ltd. Al Kalood makes a very popular undyed cloth sandal in one style, but in regular and deluxe. The regular sandals have cloth soles and the deluxe sandals have cloth-covered wooden soles. Al Kalood is preparing its budget for June 2015 and has estimated sales based on past experience. Information for the month of June is as follows:

Input prices

Direct materials: cloth $5.25 per metre

Direct materials: wood $7.50 per b.f

Direct manufacturing labour $15 per direct manufacturing labour-hour

Input quantities per pair of sandals

Regular Deluxe

Direct materials: cloth 1.3 metres 1.5 metres

Direct materials: wood 0 2 board foot (b.f.)

Direct manufacturing labour hours 5 7 hours

Set-up hours per batch 2 hours 3 hours

Inventory information, direct materials

Cloth Wood

Beginning inventory 610 metres 800 b.f.

Target ending inventory 386 metres 295 b.f.

Cost of beginning inventory $3,219 $6,060

Sales and inventory information, finished goods

Regular Deluxe

Expected sales in units 2,000 3,000

Selling price $120 $195

Target ending inventory in units 400 600

Beginning inventory in units 250 650

Beginning inventory in dollars $23,250 $92,625

Al Kalood accounts for inventory (both direct materials and finished goods) using the FIFO cost flow assumption.

All the sandals are made in batches of 50 pairs of sandals. Al Kalood incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labour, manufacturing costs include setup, processing, and inspection costs. Al Kalood ships 40 pairs of sandals per shipment. Al Kalood uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:

Cost type Denominator activity Rate

Manufacturing:

Setup Set-up hours $18 per setup-hour

Processing Direct manufacturing labour hrs $1.80 per DMLH

Inspection Number of pairs of sandals $1.35 per pair

Nonmanufacturing:

Marketing and general administration Sales revenue 8%

Shipping Number of shipments $15 per shipment

Al Kalood?s balance sheet for May 31 is as follows:

Al Kalood?s balance sheet as of May 31

Assets

Cash $9,435

Accounts receivable $324,000

Less: allowance for doubtful debts 16,200 307,800

Inventories

Direct materials 9,279

Finished goods 115,875

Fixed assets $870,000

Less: Accumulated depreciation 136,335 733,665

Total assets $1,176,000

Liabilities and equity

Accounts payable $15,000

Taxes payable 10,800

Interest payable 750

Long-term debt 150,000

Common stock 300,000

Retained earnings 698,904

Total liabilities and equity $1,176,054

The following additional data is provided:

• All sales are on account; 60% are collected in the month of the sale, 38% the following month and 2% are written off as bad debts.
• All purchases of materials are on account. Al Kalood pays for 80% of purchases in the month of purchase and 20% in the following month.
• All other costs are paid in the month incurred, including the declaration and payment of $15,000 cash dividend in June.
• Al Kalood is making monthly interest payments of 0.5% on a $150,000 long term loan.
• Al Kalood plans to pay the $10,800 of taxes owed as of May 31 in the month of June.
• 30% of processing, setup, and inspection costs and 10% of marketing and general administration and shipping costs are deprecation.
• Al Kalood has a policy of having a cash balance of at least $9,000 at the end of every month. Al Kalood has a line of credit with the local bank.

Required:

Prepare the following budgets for Al Kalood for the month of June:

• Sales
• Production
• Direct material purchases budget
• Direct labour budget
• Relevant manufacturing overhead budgets
• Budgeted income statement
• Cash budget with relevant receipts and payment schedules attached as notes
• Budgeted balance sheet as of June 30, 2015

ACC522 Managerial Accounting Assignment Instructions 1. Complete this assignment in groups of at least two. 2. Submit this assignment in both electronic and hard copy formats. 3. Prepare the budgets using MS Excel and submit an electronic copy of the MS Excel template with the report. 4. All members must contribute equitably to the project. 5. The due date is 4th December 2016 You are provided with the following information for Al Kalood Co. Ltd. Al Kalood makes a very popular undyed cloth sandal in one style, but in regular and deluxe. The regular sandals have cloth soles and the deluxe sandals have cloth-covered wooden soles. Al Kalood is preparing its budget for June 2015 and has estimated sales based on past experience. Information for the month of June is as follows: Input prices Direct materials: cloth $5.25 per metre Direct materials: wood $7.50 per b.f Direct manufacturing labour $15 per direct manufacturing labour-hour Input quantities per pair of sandals Regular Deluxe Direct materials: cloth 1.3 metres 1.5 metres Direct materials: wood 0 2 board foot (b.f.) Direct manufacturing labour hours 5 7 hours Set-up hours per batch 2 hours 3 hours Cloth Wood Beginning inventory 610 metres 800 b.f. Target ending inventory 386 metres 295 b.f. Cost of beginning inventory $3,219 $6,060 Regular Deluxe Expected sales in units 2,000 3,000 Selling price $120 $195 Target ending inventory in units 400 600 Beginning inventory in units 250 650 Inventory information, direct materials Sales and inventory information, finished goods Beginning inventory in dollars $23,250 $92,625 Al Kalood accounts for inventory (both direct materials and finished goods) using the FIFO cost flow assumption. All the sandals are made in batches of 50 pairs of sandals. Al Kalood incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labour, manufacturing costs include setup, processing, and inspection costs. Al Kalood ships 40 pairs of sandals per shipment. Al Kalood uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart: Cost type Denominator activity Rate Setup Set-up hours $18 per setup-hour Processing Direct manufacturing labour hrs $1.80 per DMLH Inspection Number of pairs of sandals $1.35 per pair Manufacturing: Nonmanufacturing: Marketing and general administration Shipping Sales revenue 8% Number of shipments $15 per shipment Al Kalood's balance sheet for May 31 is as follows: Al Kalood's balance sheet as of May 31 Assets Cash Accounts receivable Less: allowance for doubtful debts $9,435 $324,000 16,200 307,800 Inventories Direct materials 9,279 Finished goods Fixed assets Less: Accumulated depreciation Total assets 115,875 $870,000 136,335 733,665 $1,176,000 Liabilities and equity Accounts payable Taxes payable $15,000 10,800 Interest payable 750 Long-term debt 150,000 Common stock 300,000 Retained earnings 698,904 Total liabilities and equity $1,176,054 The following additional data is provided: 1. All sales are on account; 60% are collected in the month of the sale, 38% the following month and 2% are written off as bad debts. 2. All purchases of materials are on account. Al Kalood pays for 80% of purchases in the month of purchase and 20% in the following month. 3. All other costs are paid in the month incurred, including the declaration and payment of $15,000 cash dividend in June. 4. Al Kalood is making monthly interest payments of 0.5% on a $150,000 long term loan. 5. Al Kalood plans to pay the $10,800 of taxes owed as of May 31 in the month of June. 6. 30% of processing, setup, and inspection costs and 10% of marketing and general administration and shipping costs are deprecation. 7. Al Kalood has a policy of having a cash balance of at least $9,000 at the end of every month. Al Kalood has a line of credit with the local bank. Required: Prepare the following budgets for Al Kalood for the month of June: 1. 2. 3. 4. 5. 6. 7. 8. Sales Production Direct material purchases budget Direct labour budget Relevant manufacturing overhead budgets Budgeted income statement Cash budget with relevant receipts and payment schedules attached as notes Budgeted balance sheet as of June 30, 2015