Question
Question 1 You have been hired as the new accountant for a seasoning manufacturing and packaging company, Sea Spices Ltd, who manufacturers and packs six
Question 1
You have been hired as the new accountant for a seasoning manufacturing and packaging company, Sea Spices Ltd, who manufacturers and packs six bottled seasonings; Chicken Stew, Beef Stew, Goat Curry, Fish and Seafood Seasoning, Jerk Seasoning and All Mix Seasoning.
The following information is available:
Chicken Stew
Beef Stew
Goat Curry
Fish and Seafood
Jerk
All Mix
Expected selling price
(per 500 ml bottle)
$23.00
$23.00
$25.00
$28.00
$30.00
$23.00
Direct Materials
Chicken Stew
Beef Stew
Goat Curry
Fish and Seafood
Jerk
All Mix
per bottle
per bottle
per bottle
per bottle
per bottle
per bottle
Shadow benny
grams
100
100
100
120
120
100
Chive
grams
75
75
80
100
75
80
Garlic
grams
50
80
50
80
100
75
Pimentos
grams
50
50
50
50
75
50
Curry powder
grams
75
5
Hot peppers
grams
5
100
10
Salt
grams
5
5
5
5
5
5
Lime juice
ml
50
Vinegar
ml
250
200
180
180
150
160
Bottles
unit
1
1
1
1
1
1
Direct Labour
(hours per batch*)
Chicken Stew
Beef Stew
Goat Curry
Fish and Seafood
Jerk
All Mix
Labour - Sorting and cleaning
1
1
1
1.2
1.2
1.2
Labour - Grinding and mixing
0.5
0.5
0.6
0.6
0.6
0.75
Labour - Weighing and packing
0.4
0.4
0.4
0.4
0.4
0.4
* Every batch makes 40 bottles
Labour for Sorting and cleaning is paid at the rate of $20 per hour, Labour for Grinding and mixing is paid at $30 per hour and labour for Weighing and packing is paid at $35 per hour.
Costs of raw materials are expected to be:
Shadow benny
$30.00
Per kg
Chive
$25.00
Per kg
Garlic
$16.00
Per kg
Pimentos
$15.00
Per kg
Curry powder
$12.00
Per kg
Hot peppers
$50.00
Per kg
Salt
$200.00
Per kg
Lime juice
$60.00
Per litre
Vinegar
$20.00
Per litre
Bottles
$2.00
Per unit
Inventories of raw materials:
Shadow benny
Chive
Garlic
Pimentos
Curry powder
Hot peppers
Salt
Lime juice
Vinegar
Bottles
kgs
kgs
kgs
kgs
kgs
kgs
kgs
litres
litres
units
Opening Stock
50
20
30
20
15
20
60
10
100
500
Closing Stock
45
16
35
15
20
25
70
20
80
720
Inventories of finished goods:
Chicken Stew
Beef Stew
Goat Curry
Fish and Seafood
Jerk
All Mix
bottles
bottles
bottles
bottles
bottles
bottles
Opening Stock
100
60
40
70
50
40
Closing Stock
80
90
60
60
60
80
Fixed overheads for the month are as follows:
Factory rent
$15,000
Electricity
$2,800
Machinery depreciation
$4,200
Manager's salary
$10,000
Factory maintenance
$3,000
$35,000
Fixed overheads are allocated to the products based on the percentages below:
Chicken Stew
Beef Stew
Goat Curry
Fish and Seafood
Jerk
All Mix
25%
25%
15%
10%
10%
15%
A margin of safety of 45% is to be achieved for each product.
Note: Expected production and sales should be estimated based on producing batches of 40 units.
Required:
a)Using Microsoft Excel, prepare the following budgets:
(i)Sales budget (quantity and value)30 marks
(ii)Production budget (units)6 marks
(iii)Material usage budget (quantities)8 marks
(iv)Materials purchases budget (quantities and value)8 marks
(v)Labour budget (hours and value)6 marks
(vi)Budgeted profit statement for Month 1 ( assuming no stocks of raw materials and using principles of marginal costing)12 marks
Use of formulas in Excel and presentation of information10 marks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Managerial Accounting An Introduction to Concepts Methods and Uses
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
10th Edition
1111822239, 324639767, 9781111822231, 978-0324639766
