17.7 Barfield Primrose Limited is the manufacturer of the renowned 'Primrose' ice cream maker, which retails at
Question:
17.7 Barfield Primrose Limited is the manufacturer of the renowned 'Primrose' ice cream maker, which retails at £199. Barfield Primrose sells to wholesalers at £145 per unit. The prime cost structure of the ice cream maker is as follows:
Per unit Direct materials 37.00 Direct labour 24.00 Prime cost 61.00 For the year ending 31 December 20X2, the finance director of Barfield Primrose estimates that production overheads will be incurred totalling £312 390. He plans to use an overhead recovery rate based upon budgeted machine hours. The budget for machine hours is 17 355 hours for the year, and each unit produced uses up 1.5 machine hours.
Administrative and selling cost budgets have been prepared and the directors have recently decided on the sales forecasts for the coming year. The forecasts for the first three months are as follows:
January February March Sales forecasts: units 620 610 640 Administrative and selling costs: £ 18400 19 250 18 900 Calculate a budget overhead recovery rate for use by the company during 20X2. Then prepare a budget profit and loss account for each of the three months January-March 20X2.
Step by Step Answer:
Business Accounting And Finance For Non Specialists
ISBN: 9781861528728
1st Edition
Authors: Catherine Gowthorpe