DMG 5034: MANAGEMENT ACCOUNTING Tri 2 2021/2022

TUTORIAL 5
TOPIC 5: BUDGETARY PLANNING & CONTROL

TUTORIAL 5
BUDGETARY PLANNING & CONTROL

Question 1

Kerjaya Manufacturing has budgeted the following unit sales:

2023 Units
April 25,000
May 40,000
June 60,000
July 45,000

Of the units budgeted, 40% are sold by the Northern Division at an average price of RM15 per
unit and the remainder are sold by the Southern Division at an average price of RM12 per unit.

Instructions
Prepare separate sales budgets for each division and for the company in total for the second
quarter of 2023.

Question 2

Aemulus Industries has budgeted the following unit sales:

2023 Units
January 10,000
February 8,000
March 9,000
April 11,000
May 15,000
The finished goods units on hand on December 31, 2023, was 2,000 units. Each unit requires 3
pounds of raw materials that are estimated to cost an average of RM4 per pound. It is the
company's policy to maintain a finished goods inventory at the end of each month equal to 20%
of next month's anticipated sales. They also have a policy of maintaining a raw materials
inventory at the end of each month equal to 30% of the pounds needed for the following
month's production. There were 8,640 pounds of raw materials on hand at December 31, 2023.

Instructions
For the first quarter of 2023, prepare (1) a production budget and (2) a direct materials
budget.

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FMS 1
DMG 5034: MANAGEMENT ACCOUNTING Tri 2 2021/2022
TUTORIAL 5
TOPIC 5: BUDGETARY PLANNING & CONTROL

Question 3

Aigner Company is preparing its manufacturing overhead budget for 2023. Relevant data
consist of the following.

Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000.

Direct labor: Time is 1 hour per unit.
Variable overhead costs per direct labor hour: Indirect materials RM0.80; indirect labor
RM1.20; and maintenance RM0.50.
Fixed overhead costs per quarter: Supervisory salaries RM42,000; depreciation RM16,000; and
maintenance RM12,000.

Instructions
Prepare the manufacturing overhead budget for the year, showing quarterly data.

Question 4

Cabnet Berhad has budgeted sales revenues as follows:

June July August
Credit sales RM135,000 RM125,000 RM 90,000
Cash sales 90,000 255,000 195,000
Total sales RM225,000 RM380,000 RM285,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale
and the remaining 40% will be collected in the following month. Purchases of inventory are all
on credit and 50% is paid in the month of purchase and 50% in the month following purchase.
Budgeted inventory purchases are:
June RM300,000
July 240,000
August 105,000
Other cash disbursements budgeted: (a) selling and administrative expenses of RM48,000 each
month, (b) dividends of RM103,000 will be paid in July, and (c) purchase of equipment in
August for RM30,000 cash.

The company wishes to maintain a minimum cash balance of RM50,000 at the end of each
month. The company borrows money from the bank at 6% interest if necessary to maintain the
minimum cash balance. Borrowed money is repaid in months when there is an excess cash
balance. The beginning cash balance on July 1 was RM50,000. Assume that borrowed money in
this case is for one month.

Instructions
Prepare a cash budget for the months of July and August. Prepare separate schedules for
expected collections from customers and expected payments for purchases of inventory.

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FMS 2
DMG 5034: MANAGEMENT ACCOUNTING Tri 2 2021/2022
TUTORIAL 5
TOPIC 5: BUDGETARY PLANNING & CONTROL

Question 5

Cardiff Company is preparing its direct labor budget for 2023 from the following production
budget based on a calendar year:
Quarter Units
1 60,000
2 30,000
3 45,000
4 75,000
Each unit requires 2 hours of direct labor. The union contract provides for a 10% increase in
wage rate to RM11 per hour on October 1.

Instructions
Prepare a direct labor budget for 2023.

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FMS 3