CHAPTER 1 BUDGETING

EXERCISES SOLUTION CHECK

BUDGETING

Question 1
Product unit based:
Product A – Total Cost – RM684,000; Cost Per unit – RM76
Product B – Total Cost – RM825,000; Cost Per unit – RM55

Batch based:
Product A – Total Cost – RM78,000; Cost Per unit – RM8.67
Product B – Total Cost – RM77,500; Cost Per unit – RM5.17

Product sustaining:
Product A – Total Cost – RM18,600; Cost Per unit – RM2.07
Product B – Total Cost – RM15,400; Cost Per unit – RM1.03

Product line sustaining:

Product A – Total Cost – RM26,000; Cost Per unit – RM2.89
Product B – Total Cost – RM8,000; Cost Per unit – RM0.53

Factory sustaining:
Product A – Total Cost – RM72,000; Cost Per unit – RM8.00
Product B – Total Cost – RM120,000; Cost Per unit – RM8.00

Question 2
(a) (i) Expected enrolment (students): Undergraduate – 3,528; Graduate – 1,890
(ii) Total credit hours (hours): Undergraduate – 88,200; Graduate – 37,800
(iii) Full-time equivalent enrolment (students): Undergraduate – 2,940; Graduate – 1,575
(iv) Number of faculty members needed (members): Undergraduate – 123; Graduate – 105

(b) Faculty salaries: Undergraduate – RM7,562,040; Graduate – RM6,455,400

(c) Tuition revenue: Undergraduate – RM8,114,400; Graduate – RM3,477,600

Legislative apportionment: Undergraduate – RM2,293,200; Graduate – RM1,228,500

(d) Total Income – RM15,958,700; Total Expenses – RM17,182,040;

Amount to be raised – RM1,223,340

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LEARNING CURVE

Question 1
7th assignment time = 1.615 hours

Question 2
(d) 1 – 1,000 hours; 2 – 800 hours; 4 – 720 hours; 8 – 648 hours; 16 – 583.20 hours

Question 3
15.15 hours

Question 4
(a) 0.33 minutes

Question 5
Learning rate - 73 %

Question 6
Learning rate – 83.5 %

Question 7
Selling Price per bike: Quotation 1 – RM2,280; Quotation 2 – RM2,064;
Quotation 3 – RM2,121.60

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Question 8
(a) 90%

(c)
4 months = 92 normal workings days / 120 with overtime
Used day = (10.0+8.1+7.4+7.1) = 32.6 days = 33 days

Remaining normal workings days to 4 months

= 92 normal working days – 33 days
= 59 days

Learning rate of 90%

Up to 15 boats:
- Cumulative average time per unit = 6.6257 days
- Total cumulative time = 6.6257 days x 15 boats = 99.38 days / 99.4 days / 100 days

Time needed to complete boat 15th = Total time up to 15th boat - Total time up to 14th boat
= 99.39 days – 93.74 days
= 5.65 days / 6 days

To complete remaining 11 boats,

Days needed = Total time 15th boat – Total time 4th boat
= 99.39 days – 32.4 days
= 66.99 days / 67 days

Comparing remaining normal day and time needed to complete remaining 11 boats, 67 days
– 59 days, short of 8 days.

Up to 14 boats:
- Cumulative average time per unit = 6.6956 days
- Total cumulative time = 6.6956 days x 14 boats = 93.74 days / 93.7 days / 94 days

To complete remaining 10 boats,

Days needed = 94 days – 33 days
= 61 days

Comparing remaining normal day and time needed to complete remaining 10 boats, 61 days
– 59 days, short of 2 days.

Up to 13 boats:
- Cumulative average time per unit = 6.7714 days
- Total cumulative time = 6.7714 days x 13 boats = 88.03 days / 89 days

To complete remaining 10 boats,

Days needed = 89 days – 33 days
= 56 days

Comparing remaining normal day and time needed to complete remaining 9 boats, 56 days –
59 days, extra 3 days.

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Question 8

Within 4 months 13 boats, 2 penalty 14 boats, 1 penalty 15 boats, no penalty

RM RM RM
Purchased component 15 boats x RM40,000 = 600,000
Manufactures parts 15 boats x RM15,000 = 225,000
Other direct expenses 15 boats x RM 5,000 = 75,000
Total direct cost 900,000
Direct labour cost 100 days x RM2,500 98 days x RM2,500 92 days x RM2,500
- Normal working day = 250,000 = 245,000 = 230,000
Direct labour cost 2 days x RM5,000 8 days x RM5,000
Nil
- Overtime = 10,000 = 40,000
100 days x RM3,000 98 days x RM3,000 92 days x RM3,000
Overhead
= 300,000 = 294,000 = 276,000
2 boats x RM10,000 1 boats x RM10,000
Penalty Nil
= 20,000 = 10,000
Total Cost 1,470,000 1,459,000 1,446,000
Selling Price 15 boats x RM100,000 = 1,500,000
Profit 30,000 41,000 54,000