ny is planning to launch new products: Babywearing and Swaddle. To assist with budgeting, Adora Berhad has presented th
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.
Question 1
Adora Berhad specializes in an ergonomic baby sling carriers. To coincide with a major ‘Baby, Kids & Maternity Trade Shows 2022’, the company is planning to launch new products: Babywearing and Swaddle. To assist with budgeting, Adora Berhad has presented the following projected information for the month of July:
|
Projected Sales |
Quantity |
Sales Revenue per item (RM) |
|
|
Babywearing |
4,000 |
35.00 |
|
|
Swaddle |
2,000 |
20.00 |
|
|
|
|
Babywearing |
Swaddle |
|
Production Requirements: |
Cost per meter (RM) |
|
|
|
Material A |
4.00 |
0.5m |
4m |
|
Material B |
2.00 |
1m |
3m |
|
|
|
|
|
|
Finished Inventory: |
|
|
|
|
1st July |
|
200 |
0 |
|
31st July |
|
950 |
1,325 |
Material
There is no opening or closing work in progress, however due to inefficiencies in the production process, management expect that 5% of output will not pass quality control and therefore cannot be sold.
|
Material Inventory: |
Material A |
Material B |
|
1st July |
6,000m |
20,000m |
|
31st July |
10,200m |
14,000m |
Labour and overhead
The standard direct labour required to produce each Babywearing is 45 minutes and a Swaddle takes 30 minutes to produce. Labour is paid at RM10.00 per hour. Variable
Required:
Prepare the following Budget Statements: i. Sales Budget ii. Production Budget iii. Material Purchasing Budget iv. Labour Budget
- Overhead Absorption Budget
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