ACCA · Question 36 · Syllabus D: Budgeting

SECTION B - MULTI-TASK QUESTION 1 (BUDGETING)

Scenario: NovaTech Robotics is preparing its master budget for Quarter 1.
Data:

• Sales budget: 12,000 units.
• Opening finished goods inventory: 2,000 units. Target closing finished goods: 3,000 units.
• Each unit requires 4 microchips. Opening chip inventory: 5,000 chips. Target closing chip inventory: 7,000 chips. Chips cost $10 each.
• Cash sales are 30% of total sales revenue (Total revenue = $1,200,000). Credit sales are collected in the following quarter. Opening receivables (from Q4) to be collected in Q1 are $250,000.
• Fixed overheads are budgeted at $100,000. Variable overheads are $5 per unit produced.
• The company is currently limited by the number of skilled assembly hours available, not by sales demand.

Calculate the following 5 items:

1. Production budget (units)
2. Material purchases budget ($)
3. Total cash collections in Q1 ($)
4. Flexed budget allowance for total overheads based on actual production of 14,000 units ($)
5. Identify the Principal Budget Factor.

Select the option that correctly identifies all 5 answers.