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Managerial Accounting
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1
BUDGET 2011
DURHAM INCP9-2B
MAXAPROFIT
2
OBJECTIVE
To seek approval for FY2011 budget as follows:-
Direct Material Purchase $3.94MDirect Labor $4.71MSelling & Administrative Expenses $4.26M
Total $10.79M
Profit After Tax $4.94M
3
-Durham Inc is diversifying its business from production and manufacturing software product to the investment financing activities for international market in order to generate a steady and sustainable income in financial year 2011.
-Durham Inc will aggressively continue to pursue the 5 - Years Business Plan to assist the holding company to develop and produce new software product for the Information & Technology industry. Durham Inc also will develop and implement accelerated market entry and development plans. With this regards Durham Inc is projected $18.4M for the sales of their product (LN 35 & LN 40)
CORPORATE STRATEGIES FOR BUDGET 2011
- Durham Inc shall continue to pursue strategic alliances with home-grown , foreign company and also with complementary players to further develop the IT industry.
4
Durham IncSales Budget
For The Year Ending December 31, 2011
Total Sales for the Year = $ 18, 400, 000
Product Code LN 35 LN 40Anticipated volume in units 400, 000 240, 000
Unit Selling Price ($) 25 35
Total Sales ($)10,000,00
08,400,00
0
5
SALESSales Budget 2011 ($18.4M)
8,400,00046%
10,000,00054%
LN 35 LN 40
6
Durham IncProduction Budget
For The Year Ending December 31, 2011
Product Code LN 35 LN 40Anticipated volume in units 400,000 240,000
AddDesired ending finished goods units 30,000 25,000
Total required units 430,000 265,000
Less Beginning finished goods units 20,000 15,000
Required production units 410,000 250,000
7
PRODUCTION BUDGET Production Budget For 2011
($660K)
410,00062%
250,000 38% LN 35 LN 40
8
Durham IncDirect Materials Budget
For The Year Ending December 31, 2011
Product Code LN 35 LN 40Required production units 410,000 250,000Direct Materials per unit (pounds) 2 3Total pounds needed for production 820,000 750,000
AddDesired ending direct materials (pounds) 50,000 20,000Total materials required 870,000 770,000
Less Beginning direct materials (pounds) 40,000 10,000Direct materials purchases 830,000 760,000Cost per pound ($) 2 3Total cost of direct materials purchases ($) 1,660,000
2,280,000
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DIRECT MATERIAL BUDGET
Direct Material Budget For 2011 ($4.6M)
1,660,00042%
2,280,000 58%
LN 35 LN 40
10
Durham IncDirect Labor Budget
For The Year Ending December 31, 2011
Product Code LN 35 LN 40 Required production units 410,000 250,000 Direct Labor time (hours) per unit 0.50 0.75 Total required direct labor (hours) 205,000 187,500
Direct labor rate per hour ($) 12 12
Total direct labor cost 2,460,0002,250,00
0
11
DIRECT LABOR BUDGET
Direct Labor Budget For 2011 ($4.7M)
2,460,00052%
2,250,000 48%
LN 35 LN 40
12
OPERATION EXPENDITURE
OPEX
BUDGET
LN 35 LN 40 Total
A Direct Material 1.66M 2.28M 3.94M
B Direct Labor 2.46M 2.25M 4.71M
C Selling & Admin** 1.32M 0.82M 2.14M
TOTAL 5.44M 5.35M 10.79M
Remarks- Percentage Selling & administrative expenses based on required production unit 62:38
13
OPERATION EXPENDITURE
RM '000
2,280
1660
2,2502,460
1,320
820
0
500
1000
1500
2000
2500
3000
LN 35 LN 40
Direct Material
Direct Labor
Selling &AdministrativeExpenses
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Durham IncBudgeted Income Statement
For The Year Ending December 31, 2011$
Sales 18,400,000
Cost of goods sold 9,200,000
Gross Profit 9,200,000
Selling & Administrative Expenses 2,140,000
Income before income taxes 7,060,000
Income tax expenses (30%) 2,118,000
Net Income 4,942,000
15
THANK YOU