Subject Code : 2104AFE
Country : Australia

Assignment Task:

Guidance to Complete the  Assignment -
There are two steps to complete the assignment:

  1. First, Complete the Master Budge
  2. Second from blackboard, go to assessment and click “budgeting assignment questions” and answer each question from the master budget you have prepared.

Please follow the instructions below:

1. You must submit your master budget before you do the test. The master budget will not be seen and will not be marked. It is only a requirement for you to show you have completed your master budget before you do the test.

2. Do not open the test until you are sure you are ready to do it. If you open the test to see how it is, you will lose your only chance to do it.

3. The test is an examination of the accuracy of your master budget. You have only one attempt to do the test. So, please be sure you have completed your master budget without errors because you will answer all the questions of the test from the figures you have calculated in your master budget. That’s why it is very important to check and re-check your master budget before you do the test. During the test, you will not have time to prepare the answers for the questions or to check your master budget; you can only copy the answers you have already prepared.In addition, please be sure you do not have Computer or Internet connection problems. They will not be an excuse to do the test again. It is suggested you do the test using Griffith’s computers.

4. The test has 20 multiple-choice questions (MCQs) randomly assigned to you from a bank of questions. You have 40 minutes to answer all the questions in one sitting. Do not save or submit the test until you answered all the questions.If the test is closed for any reason, you will not be able to open and to do the test again.

5. Your master budget will not be checked or reviewed. Only conceptual questions related to budgeting will be answered but not specific questions related to the solution of the assignment. Feedback on your answers to the test will not be provided until all submissions are made.
6. No extension will be granted for this assignment.

CASE STUDY

Mayson Company produces wooden craft table. The company is completing its fifth year of operations and is preparing to build its master budget for the coming
year (2020). The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information:

a. Unit sales by quarter (for 2020) are projected as follows:

First-quarter 60 000
Second-quarter 75 000
Third-quarter 80 000
Fourth-quarter 95 000

It is expected the sales of the first and second quarter of 2021 will be the same as the fourth quarter of 2020. The selling price is $950 per unit. 50% of sales are cash sales, and 50% are credit sales. Mayson collected 60% of  credit sales in the first quarter after the sales, 35% in the following quarter. Allowance for doubtful debts is 5% of credit sales.The ending finished good inventory is 20% of the following quarter sales. Last year, the selling price and product cost/ unit were $900 and $750 respectively. Mayson uses FIFO inventory costing method.

b. Each furniture unit uses four hours of direct labour and six meters of teak wood and a half slab of marble. The cost of teakwood and marble are the same as last year. Workers are paid $25 per hour, and one meter of teak wood costs $80, while one slab of marble costs $600.

c. At the end of each quarter, Mayson plans to have 30% of the teak wood and marble needed for next quarter’s unit production.

d. Mayson buys teak wood and marble on the account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half is paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

e. Fixed overhead totals $500 000 each quarter. Of this total, $250 000 represents plant and equipment depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year’s total fixed overhead by the total labour hours needed for the year.

f. Variable overhead is budgeted at $10 per direct labour hour. All variable overhead expenses are paid for in the quarter incurred.

g. Fixed selling and administrative expenses total $50 000 per quarter, including $5 000 depreciation.

h. Variable selling and administrative expenses are budgeted at $10 per unit sold All selling and administrative expenses are paid for in the quarter incurred.

i. The balance sheet as at 31 December 2019 is as follows                                                        

ASSETS
Cash $ 250 000
Direct Materials Inventory 14 742 000
Inventry Finished Good 9 000 000
Accounts reciveable, net 3 300 000
Plant and Equipment, net 33 500 000
Total Assets $60 792 000

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable $ 7 371 000*
Capital share 25 571,000
Retained earnings 27 850 000
Total liabilities and shareholders’ equity $60 792 000

* For purchase of direct materials only.

The ending balance of Account receivable will be paid in the first quarter of 2020.

j. Mayson will pay quarterly dividends of $500 000. At the end of the third quarter, $200,000 of equipment will be purchased and paid in cash. This equipment is estimated to have five years of useful life, and Mason applies the straight-line depreciation method. After five years, it is estimated that the equipment can be sold for $5,000
k. Mayson maintains a 12% open line of credit for $20 000 000. Interests are paid at the end of each quarter. Mayson maintains a minimum cash balance of $200,000.The company borrows on the first day of the quarter and repays loans on the last day of the quarter, both in multiples of $ 100,000.
l. The tax rate is 30%.

REQUIRED :

Prepare a master budget for Mayson Company for each quarter of 2020 and for the year in total. The following component budgets must be included:
1) Sales budget (in thousands)
2) Production budget
3) Direct materials purchases budget
4) Direct labour budget
5) Overhead budget
6) Selling and administrative expenses budget
7) Ending finished goods inventory budget
8) Cost of goods sold budget (Note: Assume that there is no change in work in
       process inventories)
9) Cash budget
10) Pro Forma Profit and Loss Statement

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  • Uploaded By : Finn
  • Posted on : December 26th, 2018
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