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Part A
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Budget Preparation
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Data:
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COMPANY NAME:
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Car Fix Ltd.
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YEAR:
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2012
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Months in Budget Period
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1
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October
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2
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November
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Product Data:
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Product Name
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Car Parts
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Standard Unit Selling Price
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$225.00
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Standard Cost Data per Unit of Product
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Raw Materials
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Name
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Units
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Unit Price
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Cost
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M1
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3
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$1.90
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$5.70
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M2
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4
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$2.80
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$11.20
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M3
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2
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$4.05
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$8.10
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$25.00
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Direct Labour
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Type
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Hours
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Rate per Hour
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Manufacturing
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3
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$18.00
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$54.00
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Assembly
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1.5
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$12.00
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$18.00
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$72.00
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Variable Overhead
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Hours
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Rate per Hour
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2
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$7.00
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$14.00
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Fixed Overhead
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Budgeted
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Normal
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Total $
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Output Units
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per Month
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per Month
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$240,000
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10,000
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$24
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Total Standard Cost
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$135
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Selling and Administration Costs
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Variable per unit of Product
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$3.75
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Fixed - Total per Month
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$70,000
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Depreciation of Factory Machinery
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Included as part of Fixed (Factory) Overhead
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$40,000
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Sales Budget:
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Month
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Budgeted Sales Units
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1
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October
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9,700
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2
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November
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10,600
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3
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December
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11,000
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4
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January
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9,200
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Other Data
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Cash collections from sales:
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Percent of sales collected in month of sale
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30.00%
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Percent of sales collected in month after sale
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67.00%
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Percent of sales becoming bad debts
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3.00%
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Inventories:
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Finished goods as a percent of next month's sales
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30.00%
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Raw materials as a Percent of next month's production
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40.00%
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Cash disbursements
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Raw materials purchases:
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Percent paid in the month of purchase
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70.00%
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Percent paid in the month after purchase
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30.00%
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All other production costs (Labour & Overhead)
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Percent paid in month incurred
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60.00%
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Percent paid in the following month
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40.00%
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Fixed selling and administration Costs
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All paid in the month incurred
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Variable selling and administration Costs
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Percent paid in the month incurred
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0.00%
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Percent paid in the following month
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100.00%
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Tax payable
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Tax Rate
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30.00%
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Month Paid in
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December
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Balance Sheet as at the Beginning of the Budget Period
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Balance Sheet Date
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30th September 2012
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Assets:
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Cash
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$74,000
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Accounts Receivable, Net
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$880,000
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Finished Goods Inventories:
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Units
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2,910
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Unit Cost
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$135.00
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Amount
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$392,850
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Raw Materials Inventories:
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Units
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Value
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M1
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11,964
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$22,732
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M2
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15,952
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$44,666
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M3
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7,976
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$32,303
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$99,700
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Plant and Equipment:
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Cost
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$2,460,000
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Accumulated Depreciation
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$940,000
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Net
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$1,520,000
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$2,966,550
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Equities:
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Accounts Payable (Raw Materials)
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$150,000
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Taxes Payable
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$140,000
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Accrued Selling and Administration Costs
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$30,000
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Accrued Production Costs
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$145,000
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Paid Up Capital
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$1,700,000
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Retained Earnings
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$801,550
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$2,966,550
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Required:
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Prepare the following Budgets for the months of October and November only:
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a)
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Sales Budget
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b)
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Production Budget (in units only)
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c)
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Materials Cost Budget
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d)
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Wages Cost Budget
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e)
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Production Overheads Cost Incurred Budget
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f)
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Total Production Cost Incurred Budget
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g)
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Raw Materials Purchases Budget
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h)
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Marketing and Administration Cost Budget
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i)
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Cash Receipts Budget
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j)
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Cash Payments Budget
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k)
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Summary Cash Budget
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l)
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Budgeted Profit and Loss Statements (include a fixed overhead volume variance)
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m)
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Budgeted Balance Sheets
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