You are the CEO of RPN Co., Ltd. and your team has prepared a budget for 2022 by quarter as shown in the followingsheets.

1. Discuss how you think about the proposed budget and the performance of the company. What can you suggest to improve both the businessoperations and the budgeting?
2. Suppose budgeted sales for quarter 1 and quarter 2 are to be revised down from 8,000 and 8,500 units respectively. Explain how these changes will affect the budgets. Also, recommend some strategies to tackle the drop in sales and improve the performance in 2022. You may present a revised master budget to support your argument.

		Q3 / 2021	Q4 / 2021	Q1 / 2022	Q2 / 2022	Q3 / 2022	Q4 / 2022	Year 2022
Sales Budget	Budgeted sales in units			8,000	8,500	10,000	12,000	38,500
Selling price per unit			$ 80	$ 80	$ 80	$ 80	$ 80
Total budgeted sales			$ 640,000	$ 680,000	$ 800,000	$ 960,000	$ 3,080,000
Production Budget	Budgeted Sales			8,000	8,500	10,000	12,000	38,500
Added: Desired ending inventory			3,600	5,100	3,900	4,680	4,680
Total Needs			11,600	13,600	13,900	16,680	43,180
Less: Beginning inventory			3,240	3,600	5,100	3,900	3,240
Required production			8,360	10,000	8,800	12,780	39,940
Direct Materials Budget	Production			8,360	10,000	8,800	12,780	39,940
Materials per unit (pounds)			5	5	5	5	5
Production needs			41,800	50,000	44,000	63,900	199,700
Added: Desired ending inventory			19,000	23,000	21,000	22,400	22,400
Total Needs			60,800	73,000	65,000	86,300	222,100
Less: Beginning inventory			20,000	19,000	23,000	21,000	20,000
Materials to be purchased (pounds)		40,800	54,000	42,000	65,300	202,100
Cost per unit			$ 3	$ 3	$ 3	$ 3	$ 3
Materials to be purchased			$ 122,400	$ 162,000	$ 126,000	$ 195,900	$ 606,300
Direct Labor Budget	Units of production			8,360	10,000	8,800	12,780	39,940
Direct labor per unit			2	2	2	2	2
Labour hours required			16,720	20,000	17,600	25,560	79,880
Hourly wage rate			$ 10	$ 10	$ 10	$ 10	$ 10
Total direct labor costs			$ 167,200	$ 200,000	$ 176,000	$ 255,600	$ 798,800
Manufacturing Overhead Budget	Variable Expenses
Budgeted DLH			16,720	20,000	17,600	25,560	79,880
Indirect labor ($0.60/DLH)			$ 10,032	$ 12,000	$ 10,560	$ 15,336	$ 47,928
Indirect materials ($0.3/DLH)			$ 5,016	$ 6,000	$ 5,280	$ 7,668	$ 23,964
Employee welfare ($1.6/DLH)			$ 26,752	$ 32,000	$ 28,160	$ 40,896	$ 127,808
Facilities ($0.5/DLH)			$ 8,360	$ 10,000	$ 8,800	$ 12,780	$ 39,940
Variable mfg. OH costs			$ 50,160	$ 60,000	$ 52,800	$ 76,680	$ 239,640
Fixed Expenses
Salary and wages			$ 50,600	$ 50,600	$ 50,600	$ 50,600	$ 202,400
Government fees			$ 6,500	$ 6,500	$ 6,500	$ 6,500	$ 26,000
Insurance expense			$ 7,200	$ 7,200	$ 7,200	$ 7,200	$ 28,800
Maintenance costs			$ 11,500	$ 11,500	$ 11,500	$ 11,500	$ 46,000
Utilities			$ 10,600	$ 6,600	$ 9,600	$ 6,600	$ 33,400
Depreciation expense			$ 24,000	$ 24,000	$ 24,000	$ 24,000	$ 96,000
Other expenses			$ 3,000	$ 3,000	$ 3,000	$ 3,000	$ 12,000
Fixed mfg. OH costs			$ 113,400	$ 109,400	$ 112,400	$ 109,400	$ 444,600
Total mfg. OH costs			$ 163,560	$ 169,400	$ 165,200	$ 186,080	$ 684,240
Selling Expense Budget	Advertising			$ 12,960	$ 18,432	$ 19,800	$ 15,696	$ 66,888
Sales commission			$ 51,840	$ 73,728	$ 79,200	$ 62,784	$ 267,552
Salary: Sales team			$ 38,000	$ 38,000	$ 38,000	$ 38,000	$ 152,000
Travel expenses			$ 3,600	$ 3,600	$ 3,600	$ 3,600	$ 14,400
Entertainment expenses			$ 2,400	$ 2,400	$ 2,400	$ 2,400	$ 9,600
Insurance			$ 600	$ 600	$ 600	$ 600	$ 2,400
Government fee			$ 400	$ 400	$ 400	$ 400	$ 1,600
Facilities			$ 300	$ 300	$ 300	$ 300	$ 1,200
Depreciation			$ 3,000	$ 3,000	$ 3,000	$ 3,000	$ 12,000
Other expenses			$ 700	$ 700	$ 700	$ 700	$ 2,800
Total selling expenses			$ 113,800	$ 141,160	$ 148,000	$ 127,480	$ 530,440
Administrative Expense Budget	Salary: Management team			$ 40,848	$ 40,848	$ 40,848	$ 40,848	$ 163,392
Salary: Support staffs			$ 17,000	$ 17,000	$ 17,000	$ 17,000	$ 68,000
Insurance			$ 2,150	$ 2,150	$ 2,150	$ 2,150	$ 8,600
Government fee			$ 1,200	$ 1,200	$ 1,200	$ 1,200	$ 4,800
Facilities			$ 600	$ 600	$ 600	$ 600	$ 2,400
Office supplies			$ 1,400	$ 1,400	$ 1,400	$ 1,400	$ 5,600
Depreciation			$ 10,000	$ 10,000	$ 10,000	$ 10,000	$ 40,000
Other expenses			$ 800	$ 800	$ 800	$ 800	$ 3,200
Total admin. expenses			$ 73,998	$ 73,998	$ 73,998	$ 73,998	$ 295,992
Expected Cash Disbursements for Materials	Materials to be purchased		$ 130,000	$ 122,400	$ 162,000	$ 126,000	$ 195,900	$ 736,300
80% in the same month		$ 104,000	$ 97,920	$ 129,600	$ 100,800	$ 156,720
20% in the following month			$ 26,000	$ 24,480	$ 32,400	$ 25,200
Total cash disbursements		$ 104,000	$ 123,920	$ 154,080	$ 133,200	$ 181,920	$ 697,120
Expected Cash Collections	Total budgeted sales	$ 700,000	$ 800,000	$ 640,000	$ 680,000	$ 800,000	$ 960,000	$ 4,580,000
60% in the same month	$ 420,000	$ 480,000	$ 384,000	$ 408,000	$ 480,000	$ 576,000
40% in the following month		$ 280,000	$ 320,000	$ 256,000	$ 272,000	$ 320,000
Total cash collections	$ 420,000	$ 760,000	$ 704,000	$ 664,000	$ 752,000	$ 896,000	$ 4,196,000
Capital Expenditure Budget	Computer			$ -	$ -	$ -	$ 80,000	$ 80,000
Vehicles			$ -	$ -	$ -	$ 70,000	$ 70,000
Total			$ -	$ -	$ -	$ 150,000	$ 150,000
Cash Budget	Beginning cash balance			$ -	$ 61,522	$ (13,116)	$ 42,486	$ -
Add: Cash collections			$ 704,000	$ 664,000	$ 752,000	$ 896,000	$ 3,016,000
Total cash available			$ 704,000	$ 725,522	$ 738,884	$ 938,486	$ 3,016,000
Less: Cash disbursements
Materials			$ 123,920	$ 154,080	$ 133,200	$ 181,920	$ 593,120
Diret labor			$ 167,200	$ 200,000	$ 176,000	$ 255,600	$ 798,800
Manufacturing overhead			$ 163,560	$ 169,400	$ 165,200	$ 186,080	$ 684,240
Selling expenses			$ 113,800	$ 141,160	$ 148,000	$ 127,480	$ 530,440
Admin. Expenses			$ 73,998	$ 73,998	$ 73,998	$ 73,998	$ 295,992
Equipment purchase			$ -	$ -	$ -	$ 150,000	$ 150,000
Dividend			$ -	$ -	$ -	$ -	$ -
Total disbursements			$ 642,478	$ 738,638	$ 696,398	$ 975,078	$ 3,052,592
Excess (deficiency)			$ 61,522	$ (13,116)	$ 42,486	$ (36,592)	$ (36,592)
Financing:
Borrowing			$ -	$ -	$ -	$ -	$ -
Repayments			$ -	$ -	$ -	$ -	$ -
Interest			$ -	$ -	$ -	$ -	$ -
Total financing			$ -	$ -	$ -	$ -	$ -
Ending cash balance			$ 61,522	$ (13,116)	$ 42,486	$ (36,592)	$ (36,592)