Reference no: EM132583176

The marketing department of Nishat Textile has submitted the following sales forecast for the upcoming fiscal year:

                                1st Quarter              2nd Quarter         3rd Quarter         4th Quarter

Budgeted unit

Sales                      16,000                 14,000                    13,000             16,000

• The sales price per unit is $11. The 65% of the sales are collected in the same month and 33% collected in the next month of sales and 2% is uncollectable. The AR at the start of the 1st Quarter was $11,000.

• The company expects to start the first quarter with 4,000 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 4,100 units.

• In addition, the beginning raw materials inventory for the first quarter is budgeted to be 5,520 pounds and the beginning accounts payable for the first quarter is budgeted to be $17,220. Each unit requires 8 pounds of raw material that costs $10 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 5,540 pounds. Management plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter.

• It took 0.5 hours to make one unit and the labours are paid Rs. 200 per hour and paid at the same month of occurrence. The manufacturing overhead are applied to the job on the basis of direct labour hours. The manufacturing overhead rate is Rs. 50 per direct labour hour.

Required:

Question 1: Prepare the Sales budget.

Question 2: Prepare the cash collection from sales budget

Question 3: Prepare the company's production budget for the upcoming fiscal year.

Question 4: Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.

Question 5: Prepare the direct labour hours budget and the amount paid.

Question 6: Prepare the manufacturing overhead budget.