Question

Q.6. Britton Corporation manufactures and sells two products, Thingone and Thingtwo. In July, 20A, the company's Budget Department gathered the following data to project sales and budget requirement for 20B: Projected sales: Product Units Price Thingone 60,000 $ 70 Thingtwo 40,000 100 Inventories (in Units): Product Expected January 1, 20B Desired December 31,20B Thingone 20,000 25,000 Thingtwo 8,000 9,000 To produce one unit of Thingone and Thingtwo, the following raw materials are used Amount used per unit Raw Material Thingone Thingtwo A 4 lbs 5 lbs B 2 lbs 3 lbs с 1 Unit Projected data for 20B with respect to raw materials are as follows: Anticipated Expected Desired Purchase Inventories Inventories Raw Material Price January 1, 20B December 31,20B A $8 32,000 lbs 36,000 lbs B 5 29,000 lbs 32,000 lbs с 3 6,000 units' 7,000 units Projected direct labor requirements and rates for 20B are as follows: Product Hours per Unit Rate per Hour Thingone 2 $8 Thingtwo 3 9 Factory overhead is applied at the rate of $2 per direct labor hour. Required: Based on the projections and budget requirements for 20B for Thingone and Thingtwo prepare the following 20B budgets: 1. Sales Budget 2. Production budget 3. Raw material purchase budget 4. Direct Labor Budget 5. Budgeted finished goods inventory at December 31,20B (2+2+2+2+2=10)

Answer 1

1. Sales Budget

Thingone Thingtwo Total

Sales Units 60,000 40,000

Selling Price $70 $100

Sales Value $42,00,000 $40,00,000 $82,00,000

2. Production Budget

      Thingone Thingtwo

Sales Units 60,000 40,0000

(+) Desired Closing Stock (Dec 31,20B) 25,000 9,000

Total Quantity Required 85,000 49,000

(-)Opening Stock (Jan1,20B) 20,000 8,000

Units to be produced 65,000 41,000

3. Raw Material Purchase Budget

Raw Material A   Raw Material B Raw Material C

Thingone (4*65,000)260000   (2*65000)130000

Thingtwo (5*41000)205000    (3*41000)123000 (1*41000)41000

Total Raw MAterial for Production 465,000 253000 41000

(+) Desired Closing Stock (Dec 31,20B) 36000 32000 7000

Total Quantity 501000   285000 48000

(-)Opening Stock (Jan1,20B) 32000 29000 6000

Units to be Purchased 469000 256000 42000

Purchase Price $8 $5 $3

Total Raw MAterial Purchase $37,52,000 $1280000 $126000

4. Direct Labour Budget

Units to be produced Hours per unit Total Hours Rate per hour Total Budget Cost  

Thingone 65,000 2 130,000(2*65000)   $8 $1040000(130000*$8)

Thingtwo 41,000 3 123,000(3*41000) $9 $1107000(123000*$9)

5.Budgeted Finished goods inventory at Dec 31,20B