P9.40 LO9.11(appendix) Production, materials, labour and overhead budgets: manufacturer

The La Casa Division of Peters Ltd produces an intricate component used in Peters major product line. Recently, the divisional manager has been concerned by a lack of coordination between purchasing and production personnel and believes that a monthly budgeting system should be introduced to manage these interdependencies.

As an experiment, La Casas divisional manager has decided to develop budget information for the third quarter of the current year to test the system, before the full budget system is implemented for the following year. In response to the divisional managers request, the divisional accountant has accumulated the following data:

Sales:

Sales to 30 June, the first six months of the current year, are 24 000 units. Actual sales in units for May and June, and estimated unit sales for the next four months, are as follows: