The document provides a sales forecast and production requirements for Discount Furniture to produce desk and chair sets over three months. It includes the materials and labor costs required for the budget. The information is used to complete budget schedules for sales, production, materials purchases, and labor costs.
The document provides a sales forecast and production requirements for Discount Furniture to produce desk and chair sets over three months. It includes the materials and labor costs required for the budget. The information is used to complete budget schedules for sales, production, materials purchases, and labor costs.
The document provides a sales forecast and production requirements for Discount Furniture to produce desk and chair sets over three months. It includes the materials and labor costs required for the budget. The information is used to complete budget schedules for sales, production, materials purchases, and labor costs.
The document provides a sales forecast and production requirements for Discount Furniture to produce desk and chair sets over three months. It includes the materials and labor costs required for the budget. The information is used to complete budget schedules for sales, production, materials purchases, and labor costs.
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 3
10.
18 Discount Furniture Pty Ltd manufactures a variety of desks, chairs, tables and shelf units which are sold to public school systems throughout Queensland. The accountant of the company’s School Desk Division is currently preparing a budget for the first quarter of 20x4. The following sales forecast has been made by the division’s sales manager.
January 5 000 desk and chair sets
February 6 000 desk and chair sets March 7 500 desk and chair sets
Each desk and chair set requires 10 metres of pine planks and 1.5 hours of direct labour. Each set sells for R50. Pine planks cost R0.50 per metre and the division ends each month with enough wood to cover 10% of the next month’s production requirements. The division incurs a cost of R20.00 per hour for direct labour wages and fringe benefits. The division ends each month with enough finished goods inventory to cover 20% of the next month’s sales.
Required:
Complete the following budget schedules:
(a) Sales budget
January February March Sales (in sets) 5 000 Sales price per set R50 Sales revenue R250 000
(b) Production budget (in sets)
January February March Sales 5 000 Add: Desired ending inventory l 200 Total requirements 6 200 Less: Projected beginning inventory 1 000 Planned production 5 200
(c) Direct material purchases
January February March Planned productions 5 200 DM required per set (metres) 10 DM required for production (metres) 52 000 Add: Desired ending inventory of DM (metres) 6 300 Less: Projected beginning inventory of DM (metres) 5 200 Planned purchases 53 100 Cost per metre R0.50 Planned purchases of DM (dollars) R26 550
(d) Direct labour budget
January February March Planned production (sets) 5 200 Direct labour hours per set 1.5 Direct labour hours required 7 800 Cost per hour R20 Planned direct labour cost R156 000
(CIMA adapted)
10.22 AB is preparing its purchases budget for raw Material C for the forthcoming year. The opening inventory of raw Material C is expected to be 2 000 kg and the price is expected to be R8 per kg.
Raw Material C is used only in the production of Product D. Each unit of Product D requires two kg of Material C. Budgeted sales of Product D for the forthcoming year and for the following year are 36 000 units in each year. Sales will occur evenly throughout each year. The opening inventory is expected to be 6 000 units.
AB will implement a new inventory policy from the first month of the forthcoming year. The closing inventory that will be required at the end of the forthcoming year is as follows:
Raw material inventory: One month's production requirements
Finished goods inventory: One month's sales requirements
Required:
Calculate the material purchases budget for the forthcoming year.
