Aknowledgement

In the name of Allah the Most Gracious and Merciful.

Bless to Allah we had finished successfully our assignment, ACC 2533 on

operating budget. We would like to thank to our Creator for giving us a healthy
body and functioning mind in order to live life and learn. We had learned a lot of
things that we cannot get from the textbooks.

We owe a great many thanks to many great people who helped and supported us
during the completing of this task.

First and foremost, we must give our high respectful gratitude to our lecturer,
Madam Norazimah bt Othman for giving us opportunity to do this work and
providing her morale support, guidance and valuable comments, which made us
complete this task on time.

We really grateful because we managed to finish this task within the time given
by Madam Norazimah. Thanks to our group members, Ahmad Zahid, Fatimah,
Muhammad Naqiyuddin and Nurhafidah for their full cooperation and
commitments to complete this assignment smoothly. Each one of us knew their
work.

Last but not least, to all our friends and family members for helping us not to give
up and giving us encouragement for pushing us farther than we thought we could
go.

1 | Page
 Introduction

CEO of Sentiasa Maju Berhad assigned our group to design and introduce a new
product to be sold in order to expand the product diversification in the company.
With the given time of 3 weeks to complete the task, our group have come up
with a brilliant idea. We have been thinking of a product that could really help
mankind. Have you ever had a problem when charging a mobile phone at a high
plug so that you could not place your mobile phone at any suitable place? It will
be hanging to the charger and damage the phone. In accordance to the problem
arise we took the advantage by producing an innovation product which is
Brilliant Phone Socket. This product will be functioning as a holder for the
phone so the phone wont be hanging while charging. It will be plugged and
supported with the head of the charger. This ensure the phone socket from falling
to the ground from a higher place. Futhermore the price of this Brilliant Phone
Socket is really affordable which is RM10 only. The best thing of this product is in
this new era most people are using handphone so the probabilty for people to
need this product are high.

This product used three direct materials which are bottle, cotton wool and
hairclip. The bottles are purchased from Evergreen & Feed Sdn. Bhd which is a
recycle company.Then, the cotton wool and the hair clip are supplied by Nibong
Tebal Enterprise Sdn. Bhd While the indirect materials are spray paint and
tape. To produce this phone socket in a month we hired 30 workers. We also hired
cleaners, storekeeper and supervisors. The details and the calculation regarding
the cost per unit of direct material, direct labour and production overhead are
shown on the following page.

2 | Page
 BRILLIANT PHONE SOCKET

Plugged and supported with

the
head of the charger

The holder for the mobile

phone

3 | Page
 DETAILS
Direct Material

i. Bottle

Month 1
Price per unit =RM0.30
Output =20000units
Total cost required =( RM0.30 x 20000units )
=RM 6000
Purchased from
Supplier =25000 units
Opening stock =0
Closing = 25000 20000 = 5000 units

Month 2
Price per unit = RM0.30
Output = 21500 units
Total cost required = ( RM0.30 x 21500units )
= RM 6450
Purchased from
Supplier = 18000 units
Opening stock = 5000 units
= (5000+18000) 21500
Closing =1500units

ii. Cotton Wool

Month 1
Price per unit =( RM2.50/10units) = RM0.25
Output = 20000 units
Total cost required = ( RM0.25 x 20000units )
= RM 5000
Purchased from = 2100 packs (purchased)
Supplier = 2000 packs (usage)
Opening stock =0
Closing = 2100 21500 = 100 packs

Month 2
Price per unit =( RM2.50/10units) = RM0.25

4 | Page
 Output = 21500 units
Total cost required = ( RM0.25 x 21500units )
= RM 5375
Purchased from = 2200 packs (purchased)
Supplier = 2150 packs (usage)
Opening stock = 100 packs
= ( 100 + 2200 ) 2150
Closing = 150 packs

iii. Hair Clip

Month 1
Price per unit =( RM5.00/50units) = RM0.10
Output = 20000units
Total cost required = ( RM0.10 x 20000units )
= RM 2000
Purchased from = 450 packs (purchased)
Supplier = 400 packs (usage)
Opening stock =0
Closing = (450 400 ) = 50 packs

Month 2
Price per unit =( RM5.00/50units) = RM0.10
Output = 21500units
Total cost required = ( RM0.10 x 21500units )
= RM 2150
Purchased from = 400 packs (purchased)
Supplier = 430 packs (usage)
Opening stock =0
= (50 + 400 ) 430
Closing = 20 packs

Direct Labour

Skilled Unskilled
No. of employee 20 workers 10 workers

5 | Page
 Working hour/day 8 hours 8 hours
Wages rate/hour RM8 RM5
20 days (5day x4
week) 160hours 160hours

Variable Overhead

i. Indirect Material

Indirect
Price 1 unit (usage) Cost
material
Spray RM7/400ml (400/100)=4ml RM7/100units = RM0.70
Tape RM3/300cm (300/30)=10cm RM3/30units = RM0.10
Total RM0.80

* 1 bottle spray = 100 units Total cost for month 1 = RM0.80x20000 =

RM16000

* 1 tape = 30 units Total cost for month 2 = RM0.80x21500 =

RM17200

ii. Indirect Labour

Indirect Salary/mont
No of workers Total Cost
labour h
Cleaner RM600 3 RM600 x 3 = RM1800
Storekeep
er RM800 1 RM800 x 1= RM800
Total RM2600

Fixed Overhead

Rates Total per Month

Supervisor 3 supervisor x RM1500 RM4,500
Rent 1 site x RM5000 RM5,000
Insurance 1 month x RM1500 RM1,500

Production Overhead

Month 1 Month 2
Utilities 2000 3000

6 | Page
 Heat & Light 3000 3500

OPERATING BUDGET

Sales budget (RM)

Expected Selling Price/unit Total

Month Sales(unit) (RM) Sales(RM)
1 180000 10 180000
2 20000 10 200000

Production Budget

Month 1 Month 2
Expected Sales (unit) 18000 20000
(+) Planned
closing stock (unit) 2000 1500
Total unit required 20000 21500
(-) Planned
Opening stock - -
Production required
(units) 20000 21500

Direct Material Usage

Bottle Cotton Wool Hairclip

Production
required Required Usage Required Usage Required Usage
(unit) per unit (unit) per unit (unit) per unit (unit)
Month 1 1 20000 1 2000 1 400
Total 20000 Total 2000 Total 400
Month 2 1 21500 1 2150 1 430
Total 21500 Total 2150 Total 430

Direct Material Purchases Budget

Month 1
Bottle Cotton Haircli

7 | Page
 p
Total material usage (unit) 20000 2000 400
(+) Planned closing stock for
Material (unit) 5000 100 50
Total material required (unit) 25000 2100 450
(-) Planned opening stock for
Material (unit) - - -
Total material to be purchased
(unit) 25000 2100 450
(x) Material price per unit RM0.1
(RM/unit) RM0.30 RM0.25 0
Total material to be purchased RM7,50
(RM) 0 RM525 RM45

Month 2

Haircli
Bottle Cotton p
Total material usage (unit) 21500 2150 430
(+) Planned closing stock for
Material (unit) 1500 150 20
Total material required (unit) 23000 2300 450
(-) Planned opening stock for
Material (unit) 500 100 50
Total material to be purchased
(unit) 18000 2200 400
(x) Material price per unit RM0.1
(RM/unit) RM0.30 RM0.25 0
Total material to be purchased RM540
(RM) 0 RM550 RM40

Direct labour Budget

Month 1 Month 2 Total

Skille Unskill Unskille Month Month
d ed Skilled d 1 2
Production 2000
required 0 20000 21500 21500 20000 21500
Labour hour per 0.5 0.75 0.5 0.75 1.25 1.25
unit hour hour hour hour hours hours
1000
Total labour hour 0 15000 10750 16125 25000 26875
(x) Wages rate
(RM) 8 5 8 5 13 13
Total direct labour 8000 15500 16662
cost (RM) 0 75000 86000 80625 0 5

8 | Page
 Production overhead budget

production overhead
budget Period
Month 1 Month 2
RM RM RM RM
Overhead
Variable :
Indirect Material 16000 17200
Indirect Labour 2600 2600
Heat and Light 3000 3500
Utilities 2000 3000
Total variable production
overhead 23600 26300
Fixed :
Insurance 1500 1500
Supervisor Salary 4500 4500
Rent and Rates 5000 5000
Total fixed production
overhead 11000 11000
Total Production
Overhead 34600 37300

Overhead Absortion Rate

RM1.38
Budgeted production 34600 / per 37300 / RM1.39
overhead/ budgeted 25000 labour 26875 per labour
absorption basis hour hour

9 | Page
 Conclusion

e n v ir c o
o n m e n v
a s a n t a lly e n B r illia
p h o f r ie n d ie n t
n e A ly n t p h o n
h o l ff e
s o c k e
d e r o r
t
d a
b l
e

Appendix

10 | P a g e
 Direct Material

Indirect Material

Suppliers Company

References

Textbook
Madam Norazimah bt Othman
Friends

11 | P a g e
 Internet
www.google.com/diyphoneholder
www.googleimage.com/bottle
www.googleimage.com/hairclip
www.googleimage.com/spraypaint
www.googleimage.com/colourfultape

12 | P a g e