Question 2

Lily Tide Ltd makes one product, which sells for $160 each in January and February and $ 180 in March, and prepares functional budgets on a monthly basis. For the first three months of 2020, the following figures are proposed:

Sales

January	10,000 units
February	11,000 units
March	10,000 units

A closing stock of 10% of the next month's sales is required, the forecast sales for April is

12,000 units.

The standard material cost of one unit of finished product is:

Material X	5 units at $3 per unit
Material Y	2 units at $8 per unit
Material Z	1 unit at $6 per unit

The standard direct labour cost of one unit of finished product is:

Department A	2 hours at $5 per hour
Department B	2 hours at $6 per hour
Department C	3 hours at $4 per hour

Material

Material	X	Y	Z
Opening Stock	16,000	15,600	18,000
Closing Stock	12,000	11,600	21,600

Required:

1. Calculate the standard prime cost of one unit of finished product.(6 marks)
2. Calculate the Sales Budget for each of months.(3 marks)
3. Calculate the Production Budget for each of months.(6 marks)
4. Calculate the Materials usage Budget for each material for each of months and in total. (6 marks)
5. Calculate the Material Purchase Budget for each material.(6marks)
6. Calculate the Labour Hour Budget(3 marks)
7. Calculate labour cost Budget(6 marks)