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. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales unit 2,000,000 6,000,000 6,000,000 2,000,000 Price/unit (RM) Ending Inventory 500,000 0.70 0.70 0.80 0.80 500,000 100,000 100,000 Inventories for both 1st January 2021 and 1st January 2022 are expected to be 100,000 blocks. The raw materials and direct labour required for each concrete block are as follows: Units Cost Raw materials 26kg RM0.01/kg Direct labour 0.015 hour RM14/hour 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.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
task 1
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
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
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