Budgetting

-------------------------------------------------
Niasa Coffee Sdn. Bhd.
-------------------------------------------------
Assessment Weightage: 5% [Group] Assessment Tool: Report
A.

Niasa Coffee Sdn Bhd, a manufacture of two products, known as White Coffee and Herbs Coffee. White Coffee is produced in Department A and Herbs Coffee in Department B. The company is planning for a three months loan of RM 30,000 starting October 2012. The bank would charge 1% interest per month and require the company to repay interest and principal on October 31, 2012. In considering the loan, you are required to prepare a projected master budget (functional and cash budget) for 2012 on yearly basis. The following information is available for 2012:

Standard Material and Labour Cost | RM | Material A | | | 1.50 per gram | Material B | | | 2.80 per gram | Direct Labour | | | 3.50 per hour | | | | | Standard Material and Labour Usage for each product | | | | White Coffee | Herbs Coffee | Material A | | 9 gram | 8 gram | Material B | | 5 gram | 7 gram | Direct Labour | | 1.15 hours | 2.5 hours |

For the year ended 2012, the company’s forecast sales for White Coffee is 16,500 units and 10,500 units for Herbs Coffee. Selling Price per unit for White Coffee and Herbs Coffee is RM 120 and RM 160, respectively. The company estimates that credit sales for the year 2012 is RM 805,430 whereas credit purchases will be RM 50,000. Overhead is recovered on a direct labour basis.
The Statement of Financial Position as at 31 December 2011 was as follows: | RM | RM | RM | Non Current Assets | | | | Land | | 42,500 | | Buildings and Equipment | 323,000 | | | Less: Acc.Depn | 63,750 | 259,250 | 301,750 | Current Assets | | | | Inventories - Finished Goods | 24,769 | | | Raw Materials |