Question

financial planning and control 

Answer 1

Question is based on calculation of following Budgets:
F G January Medico Limited Sales Budget For the January, 2021 Particulars Forecasted Unit Sales- Product Med Price Per Unit Total Gross Sales Less Sales discounts & Allowances Total Net Sales 15000 R30 R4,50,000 R4,50,000 Note 1: Total Gross Sales = Forecasted Unit Sales * Price per Unit = 15000*30 = 450000

Medico Limited Production Budget For the January, 2021 Particulars Expected Sales (Units) Add: Desired Ending Inventory/ Closing Inventory Total Production Required Less: Beginning Inventory Units to be produced January 15000 4800 19800 6000 13800 Note 2: Desired Ending Inventory = 40% of sales of February = 40% * 12000 = 4800 units Beginning Inventory = 40% of sales of January = 40% * 15000 = 6000

G H Medico Limited Direct Labour Budget For the January, 2021 Particulars Units to be produced(From Production Budget) Direct Labour hours per unit Total Direct Labours needed Direct Labour cost per hour Cost of Labour January 13800 27600 R10 R2,76,000 Note 3: Total Direct Labours needed = Units to be produced(From Production Budget) * Direct Labour hours per unit = 13800*2 = 27600 Cost of Labour Total Direct Labours needed* Direct Labour cost per hour =27600*10 = R276000

A DE F Medico Limited Overhead Budget For the January, 2021 Particulars Direct Labour hours (From Direct Labour Budget) Overhead per hour Total Overhead Number of units produced(From Production Budget) Overhead cost per unit January 27600 R3 R82,800 13800 RO Note 4: Total Overhead = Direct Labour hours * Overhead per unit = 27600*3 = R 82800 Overhead cost per unit = Total Overhead /Number of units produced =R 82800/13800 ER 6

B Medico Limited Cost of Sales Budget For the month Ending January, 2021 Particulars Finished Goods Inventory, January 1, 2021 (Note 6) Direct Labour (From Direct Hour Budget) Overhead (From Overhead Budget) Other Manufacturing Cost (Note 7) Cost of Goods Manufactured Cost of Finished Goods Avilable for sale Less: Finished Goods Inventory January 31,2021 (Note 8) Cost of Sales January R2,28,000 R2,76,000 R82,800 R1,93,200 R5,52,000 R7,80,000 R1,92,000 R5,88,000 Note 5 Calculation of Other Manufacturing Cost Particulars Total Production cost per Unit(Given) Less: Direct Labour(Labour hours per unit * Cost per hour) Less: Overhead per unit(From Overhead budget) Other Manufacturing cost per unit December R38 R20 R6 R12 January R40 R20 R6 R14 98

DE F 100 101 102 Note 6: Calculation of Finished Goods Inventory January 1, 2021 Beginning Inventory (From Production Budget) (A) Production cost per unit for the month of December (B) Cost of Beginning Inventory (A) * (B) 6000 R38 R2,28,000 104 105 Note 7: Other Manufacturing cost per unit (Note 6) (A) Units to be Produced (From production Budget) (B) Total Manufacturing Cost (A)*(B) R14 13800 R1,93,200 107 108 109 110 111 112 113 Note 8: Finished Goods Inventory January 31, 2021 Closing Inventory(From Production Budget) (A) Production cost per unit for the month of January (B) Cost of Beginning Inventory (A) * (B) 4800 R40 R1,92,000 114 115 116 117 118