Reference no: EM132701276

Paper 1
Question 1. (a) Prepare for James & Compiany a cost of production budget for July, August and September, and the total for the quarter July to September.

Selling price is calculated by a 70% mark-up on cost. The opening stock for each month should be 50% of that month's budgeted cost of sales.

(b) Use the information below to prepare a cash receipts budget for Starlight & Company for the months of July, August and September. The. company accounts for GST on a cash basis.

(c) Prepare a budgeted Income Statement for Fraser and Company for the three months ended 30 September.

All sales are on credit and 20% of customers are expected to receive a 5% prompt payment discount. 2% of all customers* accounts are expected to be uncollected.
The sale price is a mark-up of 150% on cost. Marketing expenses have a fixed cost element of $5,000 per month, plus a variable cost element which is 10% of sales ($4,000 of the fixed element is depreciation).
Interest expense is $1,000 per month. General and administrative expenses are $9,000 per month, which includes $3,000 per month for depreciation. Rental Income is $2,000 per month. The owner intends to withdraw $5,000 per month for personal expenses.

(d) Determine the profit earned by Fraser 8c Company (in Part C) assuming sales reach only 80% of budget.

Question 2. Prepare a monthly cash budget for Bega Traders for July, August and September.
Bega Traders are registered for GST, reported on a cash basis. Expected receipts are:

Purchases and expenses from the budgeted Income Statement are:

50% of expenses are paid in the month they are incurred. The balance of expenses and purchases are paid in the month following. Depreciation is $30,000 per annum. The bank account at 30 June is $5,00-0 in overdraft.

Question 3. MBA Pty Ltd is preparing its master budget It manufactures and sells only one product. Some of the data collected is shown below. Sales for the first six months are expected to be:

Two raw materials are used in manufacturing this product. Each finished unit requires 6 kg of material and 8 kg of material 'By. It is company policy to try and maintain end of month stocks at the following levels; Finished Units: 25% of the following month's sales.
Materials: The supply of material 'A is erratic. A minimum stock level of 50% of the following month's usage must be maintained. The supplier will only deliver in 10,000 kg lots, so each order must be rounded to the nearest 10,000 kg.

The desired level of closing stock for material 13.' is 20% of the following month's usage, however this may have to be reduced if the total quantity of both materials exceeds the available storage space of 460,000 kgs.
The stocks at 1 July are expected to comply with this policy.
Required:
(a) Prepare a production budget for each of the first four months July to October.

(b) Prepare a purchases budget for material 'A" for each of the three months July to September.

(c) Prepare a purchases budget for material "B" for each of the three months July to September.

Question 4. Prepare a report for management from the information below for 2019:

In your answer you should distinguish clearly between favourable and (unfavourable) variances.

Question 5. Syd Ney provides you with the following actual and estimated information.
Accounts receivable on 1 July totalled $32,780, made up of:
From May sales $10,780 (invoiced 31 May
From June sales $22,00-0 (invoiced 30 June.)

All figures above include CST. Sales are 20% cash and 80% credit. Credit customers are invoiced at the end of each month and pay as follows:
(I) 10% pay within 14 days of invoicing and receive a 2% discount.
(ii) A further 50% also pay within the first month but outside the discount period.
(iii) The. remainder pay in the second month after invoicing.
Required:
(a) Prepare a Cash Receipts Budget for the months of July, August and September.
A quarterly total is not required. Round all amounts to the nearest whole dollar.

(b) Syd Ney reports GST on a cash basis. How much GST will Syd Ney collect from its customers during the period ?

Paper 2

Question 1. Inter Gaze assembles football trophies which he sells to football clubs for $20.00 each.
Each trophy requires the following:

Inter Gaze requires inventory at the end of each month equal to 40% of the next month's expected sales. Opening inventory at the beginning of each month is equal to 40% oldie nfiont_Ws expected sales.
Required:
Prepare the following budgets for the three months ended 31 August:
(a) Sales.
(b) Production.
(c) Raw Materials Usage.
(d) Direct Labour.
(e) Manufacturing Overhead.
(f) Cost of Production.
(q) Cost of Goods Sold.
(h) Trading Statement.

Question 2. Danewin is preparing its budgets for the quarter ending 31 March. The following data is provided.

Estimated collections are:
• 40% of all sales are on credit.
• 50% are collected in the month of sale, with a 2% discount,
• 30% in the month following sale, and
'I, 2096 in the second month after sale.
Purchases are estimated at 60% of budgeted sales for the particular month.
• 80% of these purchases are paid in the month of purchase and a 3% discount is received,
• 20% of purchases are paid in the following month. Budgeted cash expenses from January are as follows:
Advertising $1r000
Salaries /Wages 8r000
Rent 3,500

Interest on Mortgage 500
General expenses 2r000
Salaries and wages will increase by 8% from 1 February. Other cash expenses will remain the same.
Drawings by the owner amount to $8,000 per month.
The P.A.Y.G. Tax Payable for the December quarter is $5,000. This amount is to be paid by the end of January.
Then Bank account balance at 1 January is $4296.
Required: (Ignoring GST in this question):
Prepare a Cash Budget for the months of January, February and March.

Question 3. juggler's Assets and Liabilities as at 31 December 2019 are detailed in the trial balance

Motor vehicles are depreciated at 20% per annum and plant and equipment at 10% per annum. Financial interest is $2,435 per quarter. Additionally, 3% of credit sales are expected to be bad. juggler forecasts that the following will occur during the quarter ending 31 March:
• juggler estimates that he will collect all of the accounts receivable at 31/12/2019. and 75% ofcollectible (i.e. 100% - 3%) accounts receivable arising from the quarter's sales.
• $4,000 will be paid off the bank loan.
• juggler will draw $1,000 per month during the period.
Accrued General & Administration Expenses Payable at 31 March 2020. Required: (Ignoring GST in this question):
(a) Prepare a budgeted Income Statement for the quarter ending 31 March 2020. clearly showing all components of cost of goods sold.
(b) Prepare a budgeted Balance Sheet for juggler as at 31 March 2020.

Question 4. Ream Pry Limited produces a single product. A comprehensive budgeting system is used by the company to plan and control operations.

The selling price of the company's single product is to be set at $25.00 per unit.

Required:
Prepare an Income Statement budget using flexible budgeting techniques for sales of 50,(X)0 units assuming that the number of units sold equals production.

Attachment:- Review Examination Paper 1 and 2.rar