Budgets and Budgetary Controls for Jaka Sdn Bhd

PART 1 (50%)

OBJECTIVE:   The purpose of this assignment is to enable learners to understand an organization’s financial goals through the preparation of operating, financial, and cash budgets that together integrate into a business plan

REQUIREMENT:

Budgets and Budgetary Controls  

Task 1: CLO3

Question

Jaka Sdn Bhd., manufactures and sells concrete blocks for residential and commercial building. Jaka expects the following sales unit, price per unit and desired ending inventory for year 2021.

Inventories for both 1^st January 2021 and 1^st January 2022 are expected to be 100,000 blocks.

The raw materials and direct labour required for each concrete block are as follows:

Jaka’s policy is to have 5 million kg of raw materials in ending inventory for the third and fourth quarters and 8 million kg of the materials in ending inventory for the first and second quarters.

Required:

Prepare the following budgets for the year 2021: -

(a) Sales budget. Show total sales by quarter and in total for the year.

(b) Production budget. Show total production unit by quarter and in total for the year.

(c) Direct material usage and purchase budget.

(d) Direct labour budget.

Task 2: CLO3

Based Jaka’s experience, fifty percent (50%) of sales are paid in cash. Of the sales on account, seventy percent (70%) are collected in the quarter of sale; the remaining thirty percent (30%) are collected in the quarter following the sale. Total sales for the fourth quarter of 2020 totaled RM2,000,000.

Required:

Refer to the sales budget prepared in Task 1. Construct a cash receipts budget including an accounts receivable aging schedule for Jaka Sdn Bhd for each quarter of year 2021.

OBJECTIVE:

To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and cost effective actions related to the products or services the business sells.

REQUIREMENT: Cost Volume profit analysis

Task 3 (CLO2)

RantauBags Company plans to sell 10,000 handbags at RM400 each in the coming year. Data on cost per handbag are as follows:

Variable selling expense is a commission of 5 percent of the sales price. Total fixed factory overhead amounts to RM800,000. Fixed selling and administrative expense totals RM400,000.

Required:

(a) Prepare a contribution margin income statement for RantauBags for the coming year.

(b) What is the effect on RantauBags operating income if 13,000 units are manufactured and sold next year? Show computation.