Intermediate : Preparation of functional and flex ible budgets

(a) A company manufactures three products: chairs, tables and benches . From the following information you are to produce :

(i) a production budget showing quantities to be manufactured and factory unit costs of each product:

(5 marks)

(ii) a purchasing budget detalhng quantities to be purchased and the total cost of materials ; (5 marks)

(iii) a direct wages budget showing hours to be worked in total and gross wages to be paid.

Fixed factory overheads are estimated at £6253 for the trading period and these are recovered on the basis of labour hours

(b) The trading period to which thts budget relates is of four weeks' duration . The labour force is expected to perform as follows :

Calculate how many carpenters and fixers should be employed?

(c) From the information in

(a) above, which is considered the 100% level of activity. show a production budget flexed to output levels of 80% . 90% and 11 0% of the target production budget.
(All calculations to nearest £1 .)

Transcribed Image Text:

Chairs Tables Benches Sales in the next trading period (units) 4000 1000 500 Material requirements Timber (per unit) 0.5 ft 1.2 ft 2.5ft Price of Timber 8 per ft Upholstery 0.2 yds Price of upholstery 4 per yd2 Fixing and finishing material costs, 5% of total material cost. Labour requirements: Carpenters (hours per unit) 0.75 0.8 1.3 Fixers and finishers (hours per unit) Carpenters rate 0.25 0.3 1.0 per hour 6 Fixers and finishers rate per hour 4.80