You expect a total of RM20200000 to be spent on fixed manufacturing overhead

You expect a total of rm20200000 to be spent on fixed

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8. You expect a total of RM20,200,000 to be spent on fixed manufacturing overhead costs as follows: Depreciation: RM4,040,000; Property taxes: RM1,010,000; Insurance: RM1,414,000; Plant supervision: RM5,050,000; Fringe benefits: RM7,070,000; Miscellaneous: RM1,616,000. Overheads are absorbed by budgeted volume of production. 9. You also estimate other operating costs for all the support departments. All support costs for Sepang Bikes happen to be fixed as follows: Administration: RM16,478,215; Marketing: RM9,886,929; Distribution: RM4,943,465; Customer service: RM1,647,821.
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10. Income taxes are expected to be at the rate of 30%. Required: a. As the accountant at Sepang Bikes, develop a master budget for the review of the entity’s controller, so that it can then be presented at a meeting with the CEO and the various department heads. Create individual /functional budgets in the following order: i. Sales budget ii. Production budget iii. Direct materials usage and purchases budget iv. Direct labor budget v. Manufacturing overhead budget vi. Ending inventories budget vii. Cost of goods sold budget viii. Support department budget ix. Budgeted statement of profit or loss Answer A) 1. Sales Revenue Budget: Sales Revenue = Number of bikes expected to be sold * Selling Price per bike = 100,000 * RM800 = RM80, 000,000. 2. Production Budget Number of bikes to be manufactured = Closing stock of bikes + Expected bikes to be sold - Opening stock of bikes = 3500 + 100000 - 2500
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= 101000 Cost of producing 101000 bikes = Direct material + Direct labour + Manufacturing overheads = 101000*(20+70+50) + 101000*(1.5*25 + 0.15*15) + 101000*75 = RM25,729,750. 3. Direct materials usage and purchase budget: Direct materials required to produce 101000 bikes = 101000*20 + 101000*70 + 101000*50 = RM14, 140,000. Purchase budget Wheels and tyres = 25000 + (101000*20) - 20000 = RM2, 025,000. Components = 87500 + (101000*70) - 70000 = RM7, 087,500. Frames = 62500 + (101000*50) - 50000 = RM5, 062,500 Total purchase cost = RM14, 175,000. 4. Direct labour budget = 101000*(1.5*25 + 0.15*15) = RM 4, 014,750. 5. Manufacturing overhead budget = 101000 * 75 + 20200000 = RM27, 775,000.
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6. Ending Inventories budget = Cost of Closing stock of bikes + Cost of closing direct materials = (3500*(20+70+50) + 3500*(1.5*25 + 0.15*15) + 3500*75) + 175000 = RM1,066,625. 7 . Cost of goods sold budget : Cost of goods sold = Cost of opening inventory of bikes + Cost of producing remaining sold units = 1136875 + (100000-2500)*(20+70+50) + (100000-2500)*(1.5*25 + 0.15*15) + (100000- 2500)*75 = RM25, 975,000.
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  • Spring '13
  • Dr.NguyenPhan
  • Economics, Sepang Bikes

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