QUESTION 2 (23 MARKS) BIA & BIA Factory produces and sells BIABIO, a type of bottled...

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QUESTION 2 (23 MARKS) BIA & BIA Factory produces and sells BIABIO, a type of bottled malt for patients' oral consumption. Due to the increased awareness and demand for the malt, BIA & BIA Factory decided to prepare a budget to plan its production activity early. The following details were obtained from the factory: • BIA & BIA Factory currently (December 2022) produces 5,000 bottles of malts on a monthly basis. Due to the increasing demand from patients at hospital, the production is expected to increase by 1,000 bottles in January 2023. It is expected to further increase by 2,000 bottles from February 2023 onwards. This increase in bottles are based on previous month. • The factory is estimated to use 5 liter of malt liquid for every bottle it produces. • Due to the increased production, the factory is estimated to have ending inventory of material (malt liquid) equivalent to 20% of the followings month's material (malt liquid) usage requirement. • All materials (malt liquid) will be purchased on credit at @ RM10 per liter of malt liquid. The suppliers are estimated to be paid in the month after purchase. • The factory is also estimated to use 3 hours of direct labour to produce 1 bottle of malts. • Direct labours are expected to be paid at the rate of RM20 per hour. Direct labours are usually paid on 7th of the following month. ou are required: To prepare direct material usage and purchase budget (including payment to suppliers) for the month of February and March 2023 (12 marks) To prepare direct labour budget (including payment to direct labour) for the month of February and March 2023 (6 marks) Briefly explain why participative budgeting an effective management tool with relevant illustration. (5 marks) QUESTION 2 (23 MARKS) BIA & BIA Factory produces and sells BIABIO, a type of bottled malt for patients' oral consumption. Due to the increased awareness and demand for the malt, BIA & BIA Factory decided to prepare a budget to plan its production activity early. The following details were obtained from the factory: • BIA & BIA Factory currently (December 2022) produces 5,000 bottles of malts on a monthly basis. Due to the increasing demand from patients at hospital, the production is expected to increase by 1,000 bottles in January 2023. It is expected to further increase by 2,000 bottles from February 2023 onwards. This increase in bottles are based on previous month. • The factory is estimated to use 5 liter of malt liquid for every bottle it produces. • Due to the increased production, the factory is estimated to have ending inventory of material (malt liquid) equivalent to 20% of the followings month's material (malt liquid) usage requirement. • All materials (malt liquid) will be purchased on credit at @ RM10 per liter of malt liquid. The suppliers are estimated to be paid in the month after purchase. • The factory is also estimated to use 3 hours of direct labour to produce 1 bottle of malts. • Direct labours are expected to be paid at the rate of RM20 per hour. Direct labours are usually paid on 7th of the following month. ou are required: To prepare direct material usage and purchase budget (including payment to suppliers) for the month of February and March 2023 (12 marks) To prepare direct labour budget (including payment to direct labour) for the month of February and March 2023 (6 marks) Briefly explain why participative budgeting an effective management tool with relevant illustration. (5 marks)

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The detailed answer for the above question is provided below Direct Material Usage and Purchase Budg... View the full answer