16.4 Barfield Primrose 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 2013, 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 3 months are as follows:

Sales forecasts:

units Administrative and selling costs: £

January 620 18 400 February 610 19 250 March 640 18 900 Calculate a budget overhead recovery rate for use by the company during 2013. Then prepare a budget income statement for each of the 3 months January–March 2013.