QUESTION $1[30$ MARKS$]$

Furncraft Limited is a furniture manufacturing company that specializes in the manufacture and supply of office desks. The company$$s product

range consists of three models of office desks viz:

$$ Ottoman

$$ French and

$$ Winchester

The finance director has provided you with the following information and has asked you to prepare the budgets listed below:

REQUIRED:

$($Utilize the formats in the answer book provided as this is the format to be provided to the Board of Directors$)$

$1\mathrm{.}1$ Sales budget for January $(1$ mark$)$

$1\mathrm{.}2$ Production budget for January and February $(3$ marks$)$

$1\mathrm{.}3$ Direct materials purchases budget of wood for January $(2$ marks$)$

$1\mathrm{.}4$ Direct materials purchases budget of steel for January $(2$ marks$)$

$1\mathrm{.}5$ Direct labour budget for January $(2$ marks$)$

$1\mathrm{.}6$ Variable manufacturing overheads budget for January $(2$ marks$)$

$1\mathrm{.}7$ Fixed manufacturing overheads budget for January $(2$ marks$)$

$1\mathrm{.}8$ Closing finished goods inventory budget for January $(2$ marks$)$

$1\mathrm{.}9$ Cost of sales budget for month ended $31$ January $(9$ marks$)$

$1\mathrm{.}10$ Sales and administrative expenses budget for January $(1$ mark$)$

$1\mathrm{.}11$ Budget Statement of Comprehensive Income for month ended $31$ January $(4$ marks$)$

INFORMATION:

$1.$ Total budgeted sales $($units$)$

ACTUAL BUDGETED

Nov Dec Jan Feb March

Ottoman desk $130146150160170$

French Desk $98110100110120$

Winchester Desk $889590100110$

$2.$ Selling price per unit for January and February

R

Ottoman desk R$4600$

French desk R$5950$

Winchester desk R$7850$

$3.$ Each desk uses the following raw materials and direct labour:

Cost Ottoman desk French desk Winchester Desk

Direct Material:

Wood R$80$ per metre $8$ metres $10$ metres $15$ metres

Steel R$110$ per metre $6$ metres $8$ metres $12$ metres

Direct Labour R$80$ per hour $4$ hours $6$ hours $8$ hours

$4.$ Expected overheads:

Manufacturing overheads

Variable R$10$ per direct labour hour

Fixed overheads R$8$ per direct labour hour

Sales and administrative overheads

Variable $10\%$ of selling price

Fixed R$220000$

$5.$ Extract of Statement of Financial Position as at $31$ December $($previous year end$)$

R

Current Assets $1004191$

Inventories $634191$

Trade Debtors $242500$

Cash $127500$

$6.$ Note to Statement of Financial Position

Inventories note:

R

Raw Materials $560950$

Wood $(3658$ metres @ R$75$ per metre$)274350$

Steel $(2866$ metres @ R$100$ per metre$)286600$

Finished Goods $73241$

Ottoman Desk $(15$ desks x R$1592)23880$

French Desk $(10$ desks xR$2138)21380$

Winchester Desk $(9$ desks x R$3109)27981$

$634191$

$7.$ Additional information:

$$ Closing inventory of raw materials is maintained at the following months required production $($i$.$e$.,$ required production x usage per unit$)$

$$ Closing inventory of finished goods is $10\%$ of following months expected sales.