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Management Accounting

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Sun Worship Leisure Wear manufactures swimwear and accessories for men and women.They operate out of rented premises in Burleigh Heads where the factory is split into amanufacturing and storage area and a retail space.The business produces 4 products: Bikinis for women Board shorts for men Beach Towels Beach Bags You, as the management accountant for the firm, have been asked to prepare a range ofbudgets for the 2018 year. The following information has been gathered:Sales Bikini Board short Towel Beach BagJanuary 2018 1,600 1,200 200 400February 2018 1,400 1,100 180 300March 2018 1,300 ...

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Sun Worship Leisure Wear manufactures swimwear and accessories for men and women.They operate out of rented premises in Burleigh Heads where the factory is split into amanufacturing and storage area and a retail space.The business produces 4 products: Bikinis for women Board shorts for men Beach Towels Beach Bags You, as the management accountant for the firm, have been asked to prepare a range ofbudgets for the 2018 year. The following information has been gathered:Sales Bikini Board short Towel Beach BagJanuary 2018 1,600 1,200 200 400February 2018 1,400 1,100 180 300March 2018 1,300 1,160 160 260April 2018 1,000 1,000 120 140May 2018 400 600 60 80June 2018 500 700 40 40July 2018 400 500 40 40August 2018 200 400 40 40September2018 1,300 1,160 160 260October 2018 1,200 1,100 180 300November2018 1,200 1,100 180 300 December2018 1,500 1,200 200 400January 2019 1,600 1,400 220 440February 2019 1,400 1,200 200 400 Bikini Board short Towel Beach BagSelling Price $100 $75 $55 $45 Product Bikini Board short Towel Beach BagDirect Materials & Direct Labour per unitFabric $18.75 $31.25 $26.25 $25Elastic/Trim $13.50 $3.00 $5.25 $1.5Direct Labour(sewingtime/machinehours) 1 hour 0.75 hours 0.4 hours 0.6 hours Other Cost information: Production Related Costs Operating CostsDirect Labour $28/hourIndirect Labour $1/unitIndirect Materials $2/unitUtilities $550/month $50/monthInsurance $2,400/year $6,000/yearFactory Supervisor’s Salary $52,000/yearAdministration Staff Wages $2,500/monthGeneral Office Expenses $1,500/monthRent $5,600/month $1,400/monthRepairs and Maintenance See belowInventory: At the end of each month the business plans to have 50% of the followingmonth’s sales units in stock as finished goods and 75% of the direct materials required forthe next month’s production.Cash Collections: 20% of sales are through the retail outlet at the factory. These customerspay for their purchases at the time of sale. The remainder of sales are to businesses thatresell Sun Worship Leisure Wear products. Credit is extended to all business customers. It isestimated 60% of these sales are collected in the month of sale and the remaining 40% arecollected in the following month.Cash Payments: All purchases, other than the purchase of direct materials, are paid at thetime the expense is incurred. It is estimated 30% of accounts payable will be paid in themonth the direct materials are purchased and the remaining 70% will be paid in thefollowing month.The interest rate payable on the loan is 6% per annum. Interest is paid monthly. The loan ison an interest only basis and the principle can be repaid at any time.Depreciation of plant and equipment totals $9,000 for the year. Depreciation is recordedmonthly.Repairs and maintenance related to manufacturing plant and equipment is estimated to be$2,500 each quarter payable in March, June, September, and December.Variable manufacturing overhead is allocated based on machine hours.Fixed manufacturing overhead is allocated based on units of production.Ignore GST andIncome Tax. Round amounts other than unit costs to nearest dollar value. The opening Balance Sheet is provided below:Sun Worship Leisure WearBalance SheetAs at 31 December 2017 AssetsCurrent AssetsCash 32,250Accounts Receivable 123,650Finished Goods Inventory 99,150Materials Inventory 114,375Total Current Assets $369,425Non-current AssetsEquipment 85,000Less: Accumulated Depreciation ( 8,000)Total Non-Current Assets $77,000Total Assets $446,425Liabilities & Shareholder EquityCurrent LiabilitiesAccounts Payable 92,500Total Current Liabilities $92,500Long-Term LiabilitiesBank Loan 175,000Total Long-Term Liabilities $175,000Total Liabilities $267,500Shareholders’ EquityShare Capital 150,000Retained Earnings 28,925Total Shareholder Equity $178,925Total Liabilities & Shareholders’ Equity $446,425Required:1. Using Excel, prepare the following budgets for the twelve-month period fromJanuary 2018 to December 2018. The first worksheet should contain your raw data and assumptions and all future worksheets should be linked to this data. Use adifferent worksheet for each budget. Show all calculations and use Excel functionswhere possible. While you should use examples in your text as a guide, the key tousing spreadsheets is that they are structured so that others can use them andfollow the flow of information without difficulty.a. Monthly Sales Revenue and Cash Collection Budgetb. Production Budget in Unitsc. Direct Materials and Cash Purchases Budgetd. Direct Labour Budgete. Manufacturing Overhead Budget (break into variable and fixed components)f. Monthly Operating Cost Budgetg. Ending Inventory budget for Finished Goodsh. Cost of Sales Budgeti. Budgeted Income Statement for the year ended 31 December 2018j. Monthly Cash BudgetYour budget spreadsheet must be submitted in Excel Format (not as an appendix in yourWORD document).

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Company Sun Worship Lesiur is engaged in the manufacturing of Swimwear & Accessories of men and women. The company manufacture and has 4 main product line, they are Biknis for women, Boards Short for men, Beach Towel & Beach Bags. They are currently operating form a rented premises in Burleigh Heads and the Factory is splited in mainly three areas. These are manufacturing, Storage & retail.  As per the projected profit & Loss Statement for the financial year ended 31st December 2018, Company total Sales across all the items stand at $2,242,500 and after deducting all the manufacturing and the operating expenses, company profitability stand at $1,089,502. Which is approximately 49% of the Total sales value. 

The product line of the company shows tremendous profitability which is clearly shown from its profit & Loss account. The company Contribution margin for all the product are $39.75 for Bikinis, $ 19.75 for Board Shorts, $12.3 for towel & $1.7 for Bags. Contribution margin percentage of the product share for bikinis it is $39.75, for board short it is 26.33% for towel it is 22.33% & for bags sit is 3.75%.  With such amount of profit company can start another factory in different region also, which leads to increase in manufacturing facility and quantity which will ultimately increase the profitability of the company. 

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