Question

XX Ltd is preparing its budget for 2019. The company has collected the following information from the managers, 1. Sales: Sales for November 2018 Sales for December 2018 Expected sales for January 2019 Expected sales for February 2019 Expected sales for March 2019 Expected sales for April 2019 Expected sales for May 2019 Selling price per unit 112,500 102,100 113,000 112,500 116,000 125,000 137,500 $12 units units units units units units units The company likes to keep 15% of next month's unit sales in ending finished goods inventory, All sales are on credit, 80% collected in the month of sale and 20% in the month after sale. Accounts receivable on December 31, 2018, totaled: $170,000 2. Direct Materials: 2 pounds of direct materials is needed to produce one unit. The company likes to keep 5% of the materials needed for the next month's production in its raw material ending inventory. Raw materials on hand on December 31, 2018, totaled 10,000 pounds. Direct materials cost is $5 per pound Payment for materials is made on credit, 70% is paid in the month of purchase and 30% is paid after the month of purchase. Accounts payable on December 31, 2018, totaled $110,000 3.Direct Labor Labor requires 5 hour per unit for completio 5 hour per unit for completion and is paid at a rate of $10 per hour. Required: Prepare the followi (a) Production Budget (b) Direct Materials Purcha (c) Schedule of expecte prepare the following for January & February 2019: [2 marks] Materials Purchase Budget in pounds and S. [3 marks) ule of expected cash payments for direct material purchases [4 Marks] Good Luck

Answer 1

Solation Given that Sales for lovember 3018 112, 500 Units units 102, 100 Sales for December aol8 3,000 unit Expected Sales for Tan 2o19 Expected Sala for Feb 2o19 T12/500 uuits t 6,000 uni+ Expectea Saes for Har 1019 Expected Sa le fs Apr 2o19 Expected Sale for May ap19 25,000 uuits duits (37 ,500 bia Sellig price per uuit 5'% everyH month. untt ale in endung feb. Nareh pvodusthion calculating of ctleiy tock of density opening tock. cloig Atock Serde March cleng (opening war 116000+ 15,of Apri Sale (A 9 to 16000 250OD x 15 16,000 x IT 7400 8750 116000 t /1 6000 + 350 1 7350. uni+$

of direct material s needed to produce 2pounds unit One com pany to ites The teep T. of he material neededfor the nept mont Det 31,9dBroteed haud Raw materlals On on o,o0o Pound s Sper pound Cost is Direct material Payment for maleral ss made on ed, 70y. i pYchase, ?0. is patd in the month of month paid. after the . Direct mateyial Yeirement at 2 117 350 x 2pound per unit pound per unit tlosing Stack of material of feb at 5. ts 100 1735 on Dec. 31 2018 totaled $ l10,000. Accounts payable o of dec material purchale cost S = ACCOunt payable on Oe c 31,20l 8 201. of dec materlal prchases Cost =loo

Labor requires 5 haur per unit for Completon and is mid at arate of $ lo per hocr o Prodution udget Less opening tock of Tan Jan Sale v I 100 13 0e0 x 169 50 Less -opening Stoct of feb febral 125e0 x5 eo 16875 ADD Closing Stock of Tan 16875 Cle b) opening of fe b ADD clonnp stock of opentng of (march) 17400 : Prodkution of Tan 13000 129 25 169 50 16875 production ot eb 25001687517400 130a5

Pebary JANUARY Particular I12500 13000 Sa les l687T 16950 te - Opening 17400 16875 AOD -clonng stoct pioctiction uniS 1/30 a5 12925 eudget in Production parti Cular FeB TAN Dre t material 9equred unts 225856 226050 A1292 13629 lonit x2 pountS T pound 1130250 It29250 Disect labour Required Hour Unit Xo.50 hour 56462-50 56512.50 Inour x D 564625 565125 Produckon Budget nTT l693875 LE95375 (b) purchae Budgel Diect materal Pasticalars TANUARY FEBRUARY Divect matesial esuied 2.2 6050 225850 1302.50 LO000 Opening toc Closing toc Rurchaxs (paundş ) 11735 226481.50 2271 52. S0 pound ($) |(13576250 13242.50.

C) Schedule f expected Cash payment for direct malestal feb Oan particulars 132412 T0 Diect maledals prchaxs beget (135162-50 7926 88.15 Cuyrent month mymed (7O1) 50331 11o000 previou s month ment 30 340728.75 aos083 75113341750x Total pay ment for divett materla Purchars 133417.50 U062 38.7 35762.50x Cument month pay ment at 70, Tan 795033.75 If2u12.56 eurent mont pmeut at o Feb 792688-75