Hao Chi is a new startup by fresh graduates from NSU who home deliver Momos across Dhaka. They make momos using locally

[answerhappygod]

Hao Chi is a new startup by fresh graduates from NSU who home
deliver Momos across Dhaka. They
make momos using locally produced flour, yeast, chicken and all the
other fresh ingredients of finest
quality. They have two momos: the standard one steamed chicken momo
and the customized one
named fried momo. The standard momos are prepared with antibiotic
free chicken along with other
ingredients and the customized momos add number of options that are
customized as per customer
demand and are deep-fried.
For the third quarter of 2022, estimated sales in units for each
product line are as follows:
Month Standard (in plates) Customized (in plates)
July 1,000 350
August 1,150 400
September 1,200 450
October 1,560 500
November 1,800 550
The CEO of the “Hao Chi Momos” provided you with the following
additional information:
Sales: The actual sales for May and the forecasted sales for June
were Tk. 1,050,000 and Tk.
1,200,000 respectively for the standard units. The relevant numbers
for the customized ones are Tk.
500,000 in May and Tk. 650,000 in June.
Hao Chi Momo prices the standard momos at Tk. 400 per plate of 8
pcs and the customized momos
Tk. 800 per plate of 8 pcs.
Inventory Policy: The Company believes in customer satisfaction and
therefore doesn’t store any ready
products. Rather they’re using lean production process where
they’re producing on demand.
Production requirements: The standard momos require 250 gm of
chicken per plate and the
customized ones require 350 gm of chicken. Chicken costs Tk. 380
per Kg. The cost of all other material
is Tk. 120 per plate for standard units and Tk.200 for the
customized units.
The standard unit requires 0.50 direct labor hours per unit and the
customized ones require 0.75 hours
of labor time. Labor cost per hour is Tk. 200.
Fixed Manufacturing Overhead is expected to be Tk. 60,000 per
month, of which Tk. 22,000 for non-cash
depreciation. Hao Chi applies manufacturing overhead to units based
on direct labor hours and the
variable manufacturing overhead rate is Tk. 25 per direct labor
hours.
Inventory policy-raw materials: Chicken is the main ingredient of
momos. With regard to the chicken
used in production, Hao Chi likes to keep safety stock of 50% of
its need of chicken for the next month’s
anticipated production. Hao Chi ended June, 2022 with 186 Kg of
meat in stock.
Payables Policy: Hao Chi signed an MOU with Bengal Meat where
Bengal Meat agrees to supply all the
meat needs on credit. According to the credit policy of Bengal meat
for Hao Chi, half of the monthly
purchase is due on the month of purchase and the rest of the due is
settled in following month of
purchase. Accounts payable for materials and other items were
expected to be Tk. 105,000 on June, 2022.
Costs of all other materials are purchased on a cash basis during
the month of purchase according to the
monthly production need.
Collection policy: Hao Chi mainly delivers their products to
corporate offices, hence offering credit term
to attract corporates. For both the standard and customized units,
40 percent of any month’s sales are
for cash. 10 percent of the credit sales are collected in the month
of sale, 70 percent of credit sales are
collected the following month and the rest of the dues are
collected in the second month following the
month of sales.
Sales and Administration costs: Monthly selling expenses consist of
the following:
Salaries and wages: Tk. 75,000
Commissions: 6% of revenue
Rent: Tk. 50,000
Utilities: 4% of revenue
Cash and financing: Hao Chi expects to maintain a minimum cash
balance of Tk. 300,000. Borrowing
can make up any anticipated cash shortage at 10% annual interest.
Bank will only lend (and accept
repayments) in Tk. 1,000 increments. Cash balance to start the
quarter is Tk. 350,000
Other information: Hao Chi will make a payment of Tk. 400,000
during July for equipment purchased
on credit on April. The company also plans to pay dividends of Tk.
250,000 in August.
Required:
Prepare the following budgets for Hao Chi Momos for the months of
the third quarter ending September,
2022.
i. Ending finished goods inventory budget
ii. Selling and administrative expense budget
iii. The case budget
iv. The budgeted income statement
Prepare the following schedules:
i. Expected cash collections