HongBao dim sum is a new startup by fresh graduates from NSU who home deliver Dim Sums across Dhaka. They make dim sums
Posted: Tue Apr 26, 2022 9:44 am
HongBao dim sum is a new startup by fresh graduates from NSU who
home deliver Dim Sums across Dhaka. They make dim sums using
locally produced flour, yeast, chicken and all the other fresh
ingredients of finest quality. They have two dim sums: the standard
one Steamed Chicken dim sum and the customized one named Fried dim
sum. The standard dim sums are prepared with antibiotic free
chicken along with other ingredients and the customized dim sums
add number of options that are customized as per customer demand
and are deep-fried.
For the second quarter of 2021, estimated sales in units for
each product line are as follows:
MonthStandard (in plates)Customized (in plates)
April
1,000
350
May
1,150
400
June
1,200
450
July
1,560
500
August
1,800
550
The CEO of the “HongBao Dim Sum” provided you with the following
additional information:
Sales: The actual sales for February and the forecasted sales
for March 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 February and Tk. 650,000 in March.
HongBao dim sum prices the standard dim sums at Tk. 400 per
plate of 8 pcs and 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 dim sums 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. HongBao 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 Dim Sums. With regard to the chicken used in production, HongBao
likes to keep safety stock of 50% of its need of chicken for the
next month’s anticipated production. HongBao ended March, 2021 with
186 Kg of meat in stock.
Payables Policy: HongBao 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 HongBao, 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 March 31, 2021.
Costs of all other materials are purchased on a cash basis
during the month of purchase according to the monthly production
need.
Collection policy: HongBao 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 manufacturing 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: HongBao 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. 1000 increments. Cash balance to start the
quarter is Tk. 350,000
Other information: HongBao will make a payment of Tk. 400,000
during May for equipment purchased on credit on April. The company
also plans to pay dividends of Tk. 250,000 in April.
Required:
Prepare the following budgets for HongBao Dim Sum for the months
of the second quarter ending June,
2021.
viii. The case
budget
ix. The budgeted income
statement
home deliver Dim Sums across Dhaka. They make dim sums using
locally produced flour, yeast, chicken and all the other fresh
ingredients of finest quality. They have two dim sums: the standard
one Steamed Chicken dim sum and the customized one named Fried dim
sum. The standard dim sums are prepared with antibiotic free
chicken along with other ingredients and the customized dim sums
add number of options that are customized as per customer demand
and are deep-fried.
For the second quarter of 2021, estimated sales in units for
each product line are as follows:
MonthStandard (in plates)Customized (in plates)
April
1,000
350
May
1,150
400
June
1,200
450
July
1,560
500
August
1,800
550
The CEO of the “HongBao Dim Sum” provided you with the following
additional information:
Sales: The actual sales for February and the forecasted sales
for March 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 February and Tk. 650,000 in March.
HongBao dim sum prices the standard dim sums at Tk. 400 per
plate of 8 pcs and 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 dim sums 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. HongBao 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 Dim Sums. With regard to the chicken used in production, HongBao
likes to keep safety stock of 50% of its need of chicken for the
next month’s anticipated production. HongBao ended March, 2021 with
186 Kg of meat in stock.
Payables Policy: HongBao 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 HongBao, 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 March 31, 2021.
Costs of all other materials are purchased on a cash basis
during the month of purchase according to the monthly production
need.
Collection policy: HongBao 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 manufacturing 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: HongBao 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. 1000 increments. Cash balance to start the
quarter is Tk. 350,000
Other information: HongBao will make a payment of Tk. 400,000
during May for equipment purchased on credit on April. The company
also plans to pay dividends of Tk. 250,000 in April.
Required:
Prepare the following budgets for HongBao Dim Sum for the months
of the second quarter ending June,
2021.
viii. The case
budget
ix. The budgeted income
statement