Opal is a manufacturer. He completed his graduation 5 years before and started working with a different manufacturing company.

570,000

Required:

Assume the role of Management Account of Gold Manufacturing Company and prepare Cash Budget and forecast the cash position of the company for 2012. (6)

• The beginning cash balance of the company was $15,000.
• The minimum cash balance requirement of the company was decided as $ 10,000.
• All sales and purchases are made in cash.
• All expenses are paid immediately as they incur.

You are also asked to prepare the following functional budgets for 2012 for presenting budgeted income statement:

1. Production budget. (3)
2. Direct materials purchase budget. (6)
3. Direct labour budget. (3)
4. Budgeted unit costs of X-1 and X-2. (4)
5. Cost of goods sold budget.(4)
6. Budgeted income statement. (4)

Mr. Opal is also interested to know the variances of actual performance from budgeted. Identify the areas of variances and calculate the following variances. You are also required to explain the probable causes of such variances and steps that Mr. Opal can take to prevent them in future.

1. Calculate labour variances for product X-1 and X-2. (6)
2. Calculate manufacturing overhead (variable) variances. (4)