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Budgets M1

The document provides budgeting information for a company that will produce and sell beds over the first three months. It details materials delivery, production capacity, sales projections, payment schedules, prices and production costs to allow budgets to be created for purchases, production, sales and costs in units and dollars for each of the three months.

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Afra Sadaf
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25 views

Budgets M1

The document provides budgeting information for a company that will produce and sell beds over the first three months. It details materials delivery, production capacity, sales projections, payment schedules, prices and production costs to allow budgets to be created for purchases, production, sales and costs in units and dollars for each of the three months.

Uploaded by

Afra Sadaf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Arame Ghumai Limited IS to go into business producing beds.

The following information


is available.

• Materials for production will be delivered from Week I in Month 1. Each week, $2400 of
materials will be delivered. These materials are the quantity required to produce 60 beds.

• Production will start in Week 2 in Month l . In each week, 60 beds will be produced,
which is the maximum production capacity of the factory.

• Sales are budgeted to be 55 beds a week, starting from Week 3 in Month I . Any beds
produced but not sold will be placed into stock in the warehouse.

• Materials are budgeted to be paid for 3 weeks after delivery, e.g. materials delivered
Week I will be paid for in Week 4.

• Customers are budgeted to pay 4 weeks after a sale, e.g. a bed sold in Week 3 Month I will
be paid for in Week 3 Month 2.

• The budgeted selling price of beds is $300 per bed.

• Assume 4 weeks in each month.

OTHER PRODUCTION COSTS:

Direct labour cost $15 per unit.


Indirect labour cost $7.5 per unit.
Production overheads 15% of production costs.

I
Required:

(a) Prepare, for the first three months of trading for Arame Ghumai Limited:
(For each of the three months, the budgets should show total figures for EACH month, NOT
weekly figures)

(1) A purchases budget in dollars ($s)

(2) A purchases budget in units (beds)

(3) A production budget in units (beds)

(4) A sales budget in units (beds)

(5) A sales budget in $

(6) A production budget in $.

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