Question
Sleepright manufactures wooden bedframes. Each unit sells for 150. Demand for the coming months is expected to be as follows: July: 2,000 units August: 3,000
Sleepright manufactures wooden bedframes.
Each unit sells for 150. Demand for the coming months is expected to be as follows:
July: 2,000 units
August: 3,000 units
September: 5,000 units
October: 6,000 units
All bedframes are sold to customers on the following terms: 10% payable in month of sale and 90% in the month following sale.
The closing bank balance on 30th June will be 240,000.
Production details are as follows:
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- The company maintains an inventory of finished goods equal to half of the following months projected sales.
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- Each unit requires 10 metres of oak costing 6 per metre. Suppliers are paid in the month following purchase. Supplies of oak are held in quantities equal to amounts required for the following month's production requirements. The value of oak purchased in June is 150,000.
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- Labour costs are budgeted to be 75,000 in July and 120,000 in August.
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- Fixed costs are estimated to be 10,000 per month inclusive of depreciation of 2,000 each month.
Complete the company's production budget for July and August:
NB: All figures in this table should be written as positive whole numbers (e.g 1,000 or 1000).
In Units | July | August |
Sales | ||
Closing inventory | ||
Opening inventory | ||
Production required |
Complete the Raw Materials Budget:
NB: All figures in this table should be written as positive whole numbers (e.g 1,000 or 1000).
July | August | |
Raw materials required for production | ||
Closing inventory | ||
Opening inventory | ||
Raw material required | ||
Price per unit | 6 | |
value of raw materials purchases | ||
Raw materials payments | 150,000 |
Complete the cash budget for July and August
NB: All figures in this table should be written as positive whole numbers (e.g 1,000 or 1000), with the exception of a net cash outflow which should be written as a negative figure, e.g -10,000
July | August | |
Cash inflows:Sales receipts | ||
Cash outflows: | ||
Purchases | ||
Labour | ||
Fixed costs | ||
Net cash inflows/(outflows) | ||
Opening balance | ||
Closing balance |
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