In: Accounting
ACTIVITY BASED BUDGETING
Fauji Fertilizer Ltd. manufactures Nitro-phosphorus Fertilizer.
Sales are seasonal due to different crops. The expected pattern of sales for the next year (2021) is as follows:
Quarter 1st 2nd 3rd 4th Year
Sales in tons 500 1,500 2,000 1,000 5,000
Quarter 1st 2nd 3rd 4th Year
Unit-level costs:
Indirect material 24,000 72,000 96,000 48,000 240,000 Utilities 5,000 15,000 20,000 10,000 50,000
Batch-level costs:
Production runs 10 30 40 20 100
Setup 4,800 14,400 19,200 9,600 48,000 Purchasing 6,000 18,000 24,000 12,000 60,000
Quality control 6,000 18,000 24,000 12,000 60,000
Product-level costs:
Chemical engineering 10,000 10,000 10,000 10,000 40,000
Facility- and general-operations-level costs:
Supervisory salaries 100,000 100,000 100,000 100,000 400,000 Insurance 50,000 50,000 50,000 50,000 200,000 Maintenance 50,000 50,000 50,000 50,000 200,000 Utilities 80,000 80,000 80,000 80,000 320,000 Depreciation 200,000 200,000 200,000 200,000 800,000
Quarter 1st 2nd 3rd 4th Year
Unit-level expenses:
Sales Commission 15,000 45,000 60,000 30,500 150,000
Customer-level expenses:
Sales Salaries 90,000 270,000 360,000 180,000 900,000
Operator Salaries 50,000 150,000 200,000 100,000 600,000
Facilities and General Operations Expenses:
Packaging Design 19,200 19,200 19,200 19,200 76,800
Facility- and general-operations-level costs:
Manager salaries 152,500 152,500 152,500 152,500 610,000 Advertising 100,000 100,000 100,000 100,000 400,000
Admin. Salaries 147,500 147,500 147,500 147,500 590,000
Quarter 1st 2nd 3rd 4th Year
Bank Loan (12%) 100,000,000
Loan Repayment 25,000,000 25,000,000 25,000,000 25,000,000 100,000,000
Plant Addition 20,000,000 50,000,000 12,000,000 5,000,000 87,000,000
Assuming same opening and ending balance in WIP, prepare all the budget schedules for 2021 except Balance Sheet (12 schedules). Include a column for each quarter, and for the year. This project should be done in MS Excel. Best of Luck!