ABC ltd manufactures three products from three basic raw materials in three departments. The company operates a budgetary control system, and values its stocks of finished goods on a marginal cost basis. From the data given below, you are required to produce for the month of June 19X9:

(a) Production budget

(b) Material usage budget

(c) Purchases budget

(d) Profit and loss account for each product and in total.

Budgeted data for June 19X9:

Product Sales Stock of finished products at 1st June 19X9 (units)
Department:
Fixed production overhead Direct labour hr Direct materials [TYPE]
Stock at 1 Jun 19X9 (units)
A $
1500000 3000 $
239000 47800 DM 11 24500 8 $
1080000 2000 2 $
201300 67100 DM 21 20500 c $
1680000 2500 3 $
391200 65200 DM 31 17500 The company is introducing a new system of inventory control which should reduce stocks. The forecast is that stocks at 30 June 19X9 will be reduced as follows: raw material by 10 per cent, finished products by 20 per cent.
Fixed production overhead is absorbed on a direct labour hour basis. It is expected that there will be no work-in-progress at the beginning or end of the month.
Administration cost is absorbed by products at a rate of 20 per cent of production cost, and selling and distribution cost is absorbed by products at a rate of 40 per cent of production cost.
Profit is budgeted as a percentage of total cost Product %
A 25 8 12! c 16!

Standard cost data, per unit of product:
Product A 8 c per unit $
Direct material OM 11 2.00 5 12 OM 21 4.00 10 9 OM 31 1.00 5 5 Rate Per hr hr hr hr Direct wages Department:
1 2.50 4 2 2 2 2.00 6 2 3 3 1.50 2 4 6 $ $ $
Other variable cost 10 20 15 ICMA, PS, Part 1, Cost Accounting 2, May 1979.