P9.40 LO 9.9 9.11 (appendix) Completion of budget schedules: manufacturer Scholastica Furniture Ltd manufactures a variety of desks, chairs, tables and book shelves that are sold to government schools in New Zealand. The financial accountant of the desk division is currently preparing the budget for the third quarter of this year. The following sales have been forecast for the third quarter. July August September 7500 desks 9000 desks 11250 desks Each desk requires 3 metres of wooden planks and 1.5 hours of direct labour. Each desk sells for $200. Wooden planks costs $18 per metre, and at the end of each month there is enough wood remaining to cover 10 per cent of the next month's production requirements. The division incurs a cost of $25 per hour for direct labour, including on-costs. The division ends each month with enough finished goods to satisfy 20 per cent of the following month's sales. Required 1. In an Excel spreadsheet, construct and complete the following budget schedules:

2. Use your spreadsheet to show how your budget schedules will change if the following budget assumptions change. (Treat each of the two parts as separate scenarios.)

(a) Competitors are expected to reduce their selling price, so Scholastica Furniture will reduce its selling price from $200 to $110 at the start of August, and direct labour cost is expected to increase to $28 per hour from the start of September.

(b) Production efficiencies are expected to reduce direct labour to 1.20 hours per unit at the start of July and the cost of wood is expected to increase to $20 per metre at the start of August.

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(a) Sales budget Sales units Selling price per unit Sales revenue (b) Production budget (units) July August September 7500 $ 200 $1500000 July August September Sales units 7500 Add ending inventory 1800 2250 Total units required 9300 Less opening inventory 1500 Planned production 7800