Kade Bhd. manufactures and sells a product that has a seasonal variations in demand, with peak...

 

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Kade Bhd. manufactures and sells a product that has a seasonal variations in demand, with peak sales in the third quarter. The following information concerns operations for 2022 - the coming year - and for the first two quarters of 2023. The company's single product sells for RM8 per unit but expected to increase by 20% from quarter three onwards. Budgeted sales in units for the next six quarters are as follows: Year 2022 quarter Year 2023 quarter 1 2 3 4 2 Budgeted sales in 40,000 units 60,000 100,000 50,000 70,000 80,000 Additional information: ) The company desires an ending inventory of finished units on hand at the end of each quarter equal to 30% of the budgeted sales for the next quarter. This requirement was met on 31 December, Year 2021, in that the company had 12,000 unit on hand to start the new year. (ii) Five kilos of raw materials are required to complete one unit of product which cost RM3 per kilo. The company requires an ending inventory of raw materials on hand at the end of each quarter equal to 10% of the production needs of the following quarter. The requirement was met on 31" December, year 2021, in that the company had 23,000 kilos worth of raw materials on hand to start the new year. (ii) Each unit requires 2 hours of labour and the rate is RM5 per hour. Required: (a) Prepare the following budgets for Year 2022 showing both quarterly and total figures: į Sales budget. ii. Production budget. ii. Direct material purchases budget (kilos and value). iv. Labour cost budget. (b) Discuss the major benefits to be gained from budgeting. Kade Bhd. manufactures and sells a product that has a seasonal variations in demand, with peak sales in the third quarter. The following information concerns operations for 2022 - the coming year - and for the first two quarters of 2023. The company's single product sells for RM8 per unit but expected to increase by 20% from quarter three onwards. Budgeted sales in units for the next six quarters are as follows: Year 2022 quarter Year 2023 quarter 1 2 3 4 2 Budgeted sales in 40,000 units 60,000 100,000 50,000 70,000 80,000 Additional information: ) The company desires an ending inventory of finished units on hand at the end of each quarter equal to 30% of the budgeted sales for the next quarter. This requirement was met on 31 December, Year 2021, in that the company had 12,000 unit on hand to start the new year. (ii) Five kilos of raw materials are required to complete one unit of product which cost RM3 per kilo. The company requires an ending inventory of raw materials on hand at the end of each quarter equal to 10% of the production needs of the following quarter. The requirement was met on 31" December, year 2021, in that the company had 23,000 kilos worth of raw materials on hand to start the new year. (ii) Each unit requires 2 hours of labour and the rate is RM5 per hour. Required: (a) Prepare the following budgets for Year 2022 showing both quarterly and total figures: į Sales budget. ii. Production budget. ii. Direct material purchases budget (kilos and value). iv. Labour cost budget. (b) Discuss the major benefits to be gained from budgeting.

Answer rating: 100% (QA)

b Major benefits to be gained from budgeting 1 Efficiency Helps the company to reduce unplanned expenditures and hence improves efficiency 2 Control o... View the full answer