Buzzers plc manufactures Product X using three different raw materials. The product details are as follows:

i.Selling price per unit $300. Seventy-five percent of sales are collected in the first month and these customers receive a 0.5% discount. The remainder is collected in the following month.

ii.Direct labour hours per unit - 8 hrs

iii.Labour rate $11.50 per hour

iv.Materials requirement per unit:

Material Required Price

A 3 Kg $5.00 per Kg

B 2 Kg $8.00 per Kg

C 4 Kg $7.00 per Kg

v.The company is considering its budgets for next year and has made the following

estimates of sales demand for Product X for July to October:

June 350 units

July 400 units

August 300 units

September 600 units

October 450 units

November 300 units

vi.It is company policy to hold stocks (inventories) of finished goods at the end of each

month equal to 50 per cent of the following month's sales demand.

vii. Raw material stocks (inventories) are expected to be 40% of the following month's

requirements. Material is paid for on a cash basis.

viii. Labour is paid on an hourly rate based on attendance. In addition to the unit direct

labour hours shown above.

ix.Overheads for the period are expected to be:

Variable overheads

Production $50 p er unit

Selling & Administration $45 per nit

Fixed Overheads

Production $15 000 (including $7 000 depreciation)

Selling & Administration $6 000 (including $500 depreciation)

x. In September, Buzzers plans to dispose of machinery. This is expected to realize

$15 000. This machinery will be replaced in August with a new piece of equipment at

a cost of $45 000, to be paid in two equal instalments in August and September.

xi. The company will receive a tax refund of $6 000 Equipment.

xii. Buzzer's policy is to maintain a minimum cash balance of $5 000. The company can

draw down on a line of credit at a rate of $2% per annum. This is repaid when there is surplus cash. Borrowing occurs on the first day of the month, repayments are made on the last day of the month.

xiii.Cash balance at July 1st was $30,000

Requirements:

a) Prepare the following budgets for the quarter from July to September 2020, inclusive:

i.Sales budget (6 marks)

ii. Schedule of cash collections (12 marks)

iii. Production budget in units (12 marks)

iv. Raw materials usage budget (12 marks)

v. Raw material purchases budget in kgs and value (15 marks)

vi. Labour requirements budget in hours and value. (9 marks)

vii. Production overhead budget (15 marks)

viii. Selling and Administration Budget (15 marks)

viv. Cash budget (25 marks)

x.Discuss the implications associated with a budgetary approach in

which budgetary data are imposed on managers.Contrast such

an approach with one in which budgetary data are self-imposed

in a participatory manner (8 marks