ASSIGNMENT1

Student Name & ID: _____________________________________

Code: ACC-421 Class: BBA-VIII

Course: Managerial Accounting Assigned date: Dec 04, 2019
Instructor: Rais Ahmad Submission date: Dec 18, 2019
Marks: 10 marks

Q.1 The following information relates to the Atticus Manufacturing Company:

Average sales price Rs.56

Sales by territory (units):

Territory 1 2 3 4 5
January 67,500 80,000 35,000 101,000 91,500
February 64,000 89,500 41,000 97,500 87,500
March 70,500 86,000 29,500 112,000 110,500

Desired finished goods inventories (units):

January 1 204,650
January 31 201,500
February 28 195,900
March 31 206,100

One unit of direct materials is required to produce one finished unit.

Direct material cost per unit: Rs.44
Desired ending direct materials inv 55% of next month’s production
Production April: 216,710 units
Required:
Prepare sales budget in units and rupees, production budget, direct materials purchase budget and
direct materials usage budget

Q.2 Union Company intends to produce the following units during the third quarter of 2015:
July 3,685
August 4,450
September 4,175
Two units of direct materials are required for each unit of finished product. Ending direct material
inventory is expected to be 70 percent of the following month’s production requirements
denominated in units of direct materials.
Required:
Prepare direct materials purchase and usage budgets assuming a purchase price of Rs.6.25.
Production for October is expected to be 4,000 units.

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Q.3 Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur
in May of each year. These peak sales are shown in the company’s sales budget for the second
quarter given below (all sales are on account):
April May June Total
Budgeted sales Rs.300, 000 Rs.500, 000 Rs.200, 000 Rs.1, 000,000

From past experience, the company has learned that 20% of a month’s sales are collected in the
month of sale, another 70% are collected in the month following sale, and the remaining 10% are
collected in the second month following sale. Bad debts are negligible and can be ignored. February
sales totaled Rs.230,000, and March sales totaled Rs.260,000.
Required:
Prepare a schedule of expected cash collections from sales, by month and in total, for the second
quarter.

Q.4 ABC Limited sales are shown in the company’s sales budget for the third quarter of 2015 given
below:
July August September Total
Budgeted cash sales Rs. 300,000 Rs. 300,000 Rs. 400,000 Rs. 1,000,000
Budgeted cash sales Rs. 600,000 Rs. 650,000 Rs. 750,000 Rs. 2,000,000

From past experience, the company has learned that 30% of a month’s sales are collected in the
month of sale, another 50% are collected in the month following sale, and the remaining 15% are
collected in the second month following sale. Bad debts are 5%. May credit sales totaled
Rs.530,000, and June credit sales totaled Rs.560,000.
Required:
Prepare a schedule of expected cash collections from sales, by month and in total, for the second
quarter.

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