Question
The company prepared the following budgeted information for the period April to June 2022: Product Ki (N$) Product Lo (N$) Selling price per unit 500
The company prepared the following budgeted information for the period April to June 2022:
| Product Ki (N$) | Product Lo (N$) |
Selling price per unit | 500 | 700 |
Direct labour (N$30 per hour) | 150 | 210 |
Direct material A (N$10 per kg) | 80 | 120 |
Direct material B (N$15 per kg) | 75 | 90 |
Variable overheads | 50 | 60 |
Value of opening inventory | 75 840 | 43 540 |
| Product Ki | Product Lo |
Opening inventory units | 1 000 | 800 |
Closing inventory units | 1 000 | 600 |
Budgeted production units | 10 000 | 5 800 |
Additional information:
- The company total fixed costs are N$2 800 000 for the budget period.
- Inventory on hand at 31 March 2022 is 12 000 kg of material A and 6 000 kg of material B.
- Expected closing inventory on 30 June 2022 for both material A and B should be enough to produce 500 units of Product Ki and 400 units of Product Lo.
- At the budget presentation meeting, the following amendments to the budget were approved:
- The selling price per unit must be increased by 20% for both products.
- Raw material price per kg for both material A and B must be increased by 10%.
Required:
1. Calculate total value of raw material A needed to be bought to meet production requirement for product Ki & Lo.
2. Calculate the total kgs for material A & B required to meet production needs for product Ki and Lo.
3. Calculate total labour hours that will be needed to meet production requirements for product Ki & Lo.
4. Calculate the total budgeted sales revenue for product Ki & Lo.
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