Reference no: EM132850087

Problem - Modern Designs Sdn, Bhd. manufactures two main products for the retail industry, MD1 and MD2. The estimated sales of these two products for year 2020 are as follows:

Product	Quantity	Price/unit
MD1	13,000	RM60.00
MD2	17,000	RM80.00

Direct costs per unit in manufacturing the products are:

	MD1	MD2
Material A	5 units	4 units
Material B	3 units	4 units
Wages per unit:
Skilled labours @ RM6.00 per hour	2 hours	3 hours
Unskilled labours @ RM4.00/hour	1 hour	2 hours

Material A can be purchased at RM2.00 per unit while material B at RM3.00 per unit. The company expects no stocks in the beginning of the year but plans to maintain the following stocks at the end of the year:

MD1 11,000 units

MD2 13,000 units

Material A 20,000 units

Material B 18,000 units

Required -

a. Prepare the following budgets for the company:

i. Sales budget for product MD1 and MD2.

ii. Production budget for product MD1 and MD2.

iii. Material usage and material purchased budget.

iv. Labour budget.

b. Explain TWO (2) importance of cash budget for an organization.