Group Project

Act 202

Section- 32

Faculty -Sys

NAME ID

Sadman Islam Hridoy 2121060630

Abdullah Bin Nirzun 2121093630

Safin Ahmed Sazzad 2132394630

Sazzad Hossain Talukder 2111888630

Ahnaf Islam Droho 2212704030

Letter of Transmittal:

November 7, 2023

Sayed Asif Hossain

Lecturer

Department of Accounting and Finance

North South University

Subject: Submission of ACT 202 group project

Dear Sir,

We have completed our group project for the ACT202 course. We have had a lot of fun working
on this project. By completing this project, you have given us the opportunity to explore our
potential and learn more about ourselves. We did our best to complete the project on time and
according to your specifications. We hope you enjoy our project and understand our
limitations. For the two months we were given the task of preparing a master budget for a local
store. We did our best to include all of the main concepts, related facts, and budget schedule
explanations.

We are sending the project in the hope of meeting your expectations. If you have any
suggestions for this project, we would love to hear from you.

Sincerely yours

Sadman Islam Hridoy

Abdullah Bin Nirzun

Safin Ahmed Sazzad

Sazzad Hossain Talukder

Ahnaf Islam Droho

Acknowledgement

I would like to acknowledge and give my warmest gratitude to my course instructor Mr Sayed
Asif Hossain who made this work possible. His guidance and advice carried me through all the
stages of writing my project. And for your brilliant comments and suggestions, thanks to you.

I would also like to give special thanks to my family as a whole for their continuous support and
understanding when undertaking my course and writing my project. Your prayer for me was
what sustained me this far.

Finally, I would like to thank God for letting me through all the difficulties. I have experienced
your guidance day by day. You are the one who let me finish my degree. I will keep on trusting
you for my future.
Introduction
There are many steps in the production process and making a piece of plastic bucket.

Direct laborers are the workers who are directly involved in the production process. Here, there
are 5 workers who are paid on an hourly basis. They work 8 hours a day and 26 days in a
month.

The manufacturing overhead costs which are related to the factory are the depreciation of the
machineries as they lose value over time. Then there is the rent of the factory, salary of the guard,
salary of the administrative officer and the annual utility expense in the factory. As a variable
overhead cost, there is the salary of the production process overseer who is also paid on an
hourly basis. His wage rate is lower than the laborers as his job is to only inspect and see the
overall process.

For first month,

Production requirements and cost procedure:

● Direct Material
● Direct Labor
● Manufacturing overhead

Selling price in the first month was 300 Taka.

● Selling price in second month increases by 15 %

● Selling price in second month was = 1.15 ×300 Taka = 345 Taka

Month Selling price Number of buckets sold

First month 300 Taka 4200 units

Second month 345 Taka 4704 units

 Master Budget

Number of units sold in the first month = 4200 units.

In second month, the selling price was increased by 15%

Number of units sold in second month went up by 12%

● Number of units sold in the second month = 1.15 × 4200= 4704 unit

Schedule of Sales Budget:

First month Second month

Budgeted Unit Sales 4200 units 4704 units

Selling price per unit 330 Taka 345 Taka

Total Sales 1,386,000 Taka 1,622,880 Taka

Schedule of Expected cash collection:

Expected cash collections First month Second month

Accounts receivable from previous sales 105,000 Taka

From first month sales:

(80% collected in the year of sale)
(80% of 1,386,000Taka) 1,108,800 Taka
(18% collected in the month following sales)
(18% of 1,386,000 Taka) Taka 249,480

From second month sales:

(85% collected in the year of sale)
(85% of 1,622,880 Taka) 13,789 Taka
Total Expected Cash Collections 1,213,800 Taka 263,269 Taka

In the first, we had a cash receivable of 105000 taka. We collect 80% taka of monthly sales in the
month of production, and 18% in the following month . We keep 2% uncollectable due to
damaged goods and theft. In the second month, we were able to collect 85% of total monthly
sales .
Schedule of Production Budget:

Production Budget First month Second month

Budgeted sales in units 4,200 unit 4,704 units

Add: Extra Ending inventory

(5% of the following month)

(5%of 4,704 units) 235 units 271 units

(5% of 4704 115%)

Total needs 4,435 units 4,975 units

Less: Beginning inventory

(500) units) ( 235 units)

Required for production 3935 units 4740 units

We keep 5% of the following month's budgeted sales as extra ending inventory. We have started
this month with 500 beginning inventory.

Direct Materials:

Quantity of plastic sheet = 2

Cost of 1 sheet = 30 Taka

Total Raw Material Cost for per bucket =2×30=60 Tk

Schedule of Direct Materials Budget:

First month Second month

Production requirements 3,935 units 4,740 units

Cost per unit 60 Taka 72 Taka

Total cost 236,100 Taka 341280 Taka

Explanation:

The production cost in the first month was 60 and in the second month it increased by 12% , so
in the second month the cost price is 60×112% =72 Tk.

Schedule of Expected Cash Disbursement:

First month Second month

Accounts payable 60,000 Taka
First month purchases:
70% is paid during the month of purchase
(70% of 2,36,100 Taka) 165,270 Taka
30% is paid in the month following 70,830 Taka
purchases
(30% of 236,100 Taka)
Second month purchases:
70% is paid during the month of purchase
(70% of 3,41,280 Taka) 2,38,896 Taka

Total cash payment 225,270 Taka 309,726 Taka

Explanation: in the first month we had an account payable of 60000 taka. We usually pay 70%
of our total cash payment in the year of production, and the rest 30% is kept accounts payable.
Which is paid in the following year.
Direct Labor:

There are 5 individuals who prepare the bucket and are paid on an hourly basis. Each of them is
paid 20 Taka per hour. They work 26 days per month. They work from 8am to 4 pm.

Predetermined minimum Number of units sold per month = 350

Therefore, the number of units sold per day = 350/30 = 11.66 box

Labor hours required per unit = 8 hours / 11.66 = 0.68 labor hours.

Total Direct Labor cost per day = (5 * 20 * 8) = 800 taka per day.

Direct Labor Cost per bucket = 800/ 11.66 = 68.61 taka.

Schedule of Direct Labor Budget:

First month Second month

Production Requirements 4,200 units 4,704 units
Direct labor hour per unit 0.68 hours 0.68 hours
Total direct labor hour needed for 2856 hours 3199 hours
production
Direct labor cost per unit
68.61 Taka/hour
20% increased in second month 82.33 Taka/hour
Total direct labor cost 195,952 Taka 263374 Taka

Explanations: In the second month labor price has increased 20% as day by day the cost
production has been increased.

Manufacturing overhead:

The people responsible for producing 1 bucket, use of processing and peeling machines,
including machineries for making the final product. The cost of each of these machineries are
taken into account, as well as depreciation.

Depreciation expense = 1800/12 =600 Taka

Monthly utility expense = 24000/12= 2000 Taka

Rent expense = 45,000/12= 3750 Taka

Monthly Salary of the administrative officer= 15,000 Taka

= total fixed manufacturing overhead= 21,350

Salary of production overseer = 10 Taka per hour.

Variable Manufacturing overhead is incurred due to the production overseer who will examine
all the raw material going into the processing machinery, including guiding the laborers through
the production process. The overseer is paid on an hourly basis. He will also overlook the
maintenance process. The individual will be working for 8 hours per day.

Therefore, total Variable Manufacturing Overhead cost per month = 10 Taka per hour × 8 hours
× 26 days = 2,080 Taka

Variable MOH cost per unit in previous month = 5.33 Taka per unit

Schedule of Manufacturing overhead Budget:

First month Second month

Production requirement 4,200 units 4,704 units
Variable MOH cost per unit 5.97 Taka/unit 6.27 Taka/unit
(12% increase on first month)
(5% increase on second month)
Total Variable manufacturing overhead 25,074 Taka 29,495 Taka
cost
Add: Fixed MOH cost
21,350 Taka
21,350 Taka

Total Manufacturing overhead cost 46424 Taka 50845 Taka

Less: Non-cash cost (36,00 Taka) (36,00 Taka)
Total cash payments for MOH cost 42,824 Taka 47,245 Taka
Explanation: The variable MOH cost will increase, because the wage of the production overseer
will be increased and it is due to the fact that the value of money decreases every year, in other
words inflation occurs. The production overseer is responsible for guiding the workers in the
manufacturing process, therefore, he is not directly a part of the direct labor for the production
process, as he will not be dealing with the work-in-process.

Schedule of selling and administrative expense:

First month Second month

Budgeted unit sales 4,200 units 4704 units
Variable selling and admin rate 2.5 Taka/ 2.5 Taka/ unit
unit
Total variable selling and administrative expense 10500 Taka 11,760 Taka
Add: Fixed selling and administrative expense 18360 Taka 18360 Taka
Total selling and administrative expense 28860 Taka 30,120 Taka

Explanation: in the second month variable selling and administrative expenses have been
increased with the proportion of production.

Schedule of Cash Budget:

First month Second

month
Beginning balance 50,000 Taka 760,064 Taka

Add: Cash collections 1213800 263,269

Taka
Total cash available 1,263,800 Taka 1,023333
Taka
 Less: Cash disbursement
Direct Materials (236100 Taka) (341280Taka)
Direct Labor ( 195,952 Taka) ( 263374
Manufacturing overhead ( 42824 Taka) Taka)
Total selling and admin expense ( 28860 Taka) (47246 Taka)
(30120 Taka)
Cash available 760,064 Tk 341,313
Taka
Loan 0 Tk 0 Taka

Interest (10%) 0
0

Loan Repayment 0

Ending cash balance 760,064 Taka 341,313 Tk

Explanation:

In both of the months we have positive cash on hand after operation. It refers to that the
operation management and collection management is efficient. Again, our pricing strategy and
cost assignment are also effective.

Prime Cost

First month Second Month

Direct Materials 236100 341280

Direct Labor 195952 263374
Total 432052 604654

Direct Labor 195952 263374

Manufacturing Overhead 42,824 47245

Total 238,776 310619

Conversion Cost

Direct Labor 195952 263374

Manufacturing Overhead 42,824 47245

Total 238,776 310619

Predetermined Manufacturing Overhead

Estimated Overhead cost 42,824 47246

Estimated units 4200 4704

POHR 10.19619048 10.04379252

Sources
https://hamkobazar.com/product/super-bucket-8ltr