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Act202 Management Accounting|Local Warehouse Store Assessment Answer

Required:
a) Prepare Sales budget for 2021
b) Prepare production budget for 2021
c) Prepare the direct material usage & purchase budget
d) Prepare direct manufacturing labour budget
e) Prepare manufacturing overhead budget
f) What is the budgeted manufacturing overhead rate?
g) What is the budgeted manufacturing overhead cost per unit for 2021?
h) Calculate the unit cost of a snowboard in closing inventory on 31 December 2021
i) Prepare ending inventory budget for 2021.
j) Prepare cost of goods sold budget for 2021
k) Prepare budgeted income & expenditure statement for year ending 31 December 2021
l) Prepare the budgeted balance sheet for Alps Ltd as at 31 December 2021
Question Two
Romper Rugs is holding two-week carpet sale at Tommy’s Club, a local warehouse store. Romper Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the privilege of returning any unsold units for a full refund. Tommy’s club has offered Romper Rugs two payment options for the use of space
Option 1: A fixed payment of $5 000 for the sale period
Option 2: 10% of total revenue earned during the sale period.
Assume Romper Rugs will incur no other costs.
Required:
a. Calculate the breakeven point in units for : (i) option 1 and (ii) option 2
b. At what level of revenues will Romper Rugs earn the same profit under either option?
(i) For what range of unit sales will the company prefer option 1?
(ii) For what range of unit sales will the company prefer option 2?
c. Calculate the degree of operating leverage at sales of 100 carpets for the two rental options
d. Explain and interpret your answer to requirement c


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