- Business
- Accounting
- my question is related to sales production and purchases budgets...
Question: my question is related to sales production and purchases budgets...
Question details
My question is related to sales, production and purchases budgets; activity-based overhead: manufacturer.
George Ltd manufactures and sells two different types of coils used in electric motors. In September, Jessica, the management accountant, compiled the following data for the upcoming annual budget.
Use of direct material:
Amount used per unit | ||
Direct material | Light coil | Heavy coil |
Sheet metal | 4 kg | 5 kg |
Copper wire | 2 kg | 3 kg |
Platform | 1 unit |
Raw material prices and inventory levels:
Anticipated purchase price $ | Expected inventories 1 Jan | Desired inventories 31 Dec | |
Raw material | $8 | 32 000 kg | 36 000 kg |
Copper wire | $5 | 29 000 kg | 32 000 kg |
Platform | $3 | 6 000 units | 7 000 units |
Direct labour requirements and rates:
Product |
Hours per unit |
Rate per hour |
Light coil |
2 |
$30 |
Heavy coil |
3 |
$40 |
Manufacturing overhead
Activity |
Cost per unit of activity driver
|
Material handling: |
|
Sheet metal and copper wire |
$0.50 per kg of raw material purchased |
Platforms |
$0.10 per unit purchased |
Machine related |
$1.50 per machine hour* |
Shipping |
$2.00 per coil shipped |
General manufacturing overhead |
$1.20 per direct labour hour |
*Total annual machine hours are 100 000 for light coils and 200 000 for heavy coils.
Finished goods inventories (in units):
Product |
Expected 1 Jan |
Desired 31 Dec |
Light coil |
20 000 |
25 000 |
Heavy coil |
8 000 |
9 000 |
Sales forecast:
Product |
Units |
Price $ |
Light coil |
60 000 |
$130 |
Heavy coil |
40 000 |
$190 |
Prepare the following budgets:
1. Sales budget (in dollars $)
2. Production budget (in units)
3. Direct material purchases budget (in quantities)
4. Direct material purchases budget (in dollars $)
5. Direct labour budget (in dollars $)
6. Manufacturing overhead budget (in dollars $)
Thanks!
Nadia
Solution by an expert tutor
