Illustrations - Budgetary Control
IILUSTRATIONS - BUDGETES
IILUSTRATION 1:
PYE Ltd produces and markets a very popular product called P. The company is interested in presenting its budget for the second quarter of the year. The following information is made available for this purpose. 1. Its expects to sell 50,000 bags of during the second quarter at a selling price of Rs 9 per kg 2. Each bag of P Requires 2.5 kgs of raw material Q and 7.5 kgs of raw material R. 3. Q costs Rs 1.20 per kg, R costs 20 paisa per kg and empty bag costs 80 paisa each 4. It requires 9 minutes of direct labour time to produce and fill one bag of P. Labour cost is Rs 5 per hour. 5. Variable manufacturing costs are Rs 0.45 per bag. Fixed manufacturing costs are Rs 30,000 per quarter. 6. Variable selling and administration expenses are 5% of sales, and fixed administration and selling expenses are Rs 25,000 per quarter. 7. Stock levels are planned as follows: Beginning of quarter End quarter
Finished bags of P 15,000 nos. 11,000 nos.
Raw material O 32,000 kgs. 26,000 kgs.
Raw material R 57,000 kgs. 47,000 kgs
Empty bags 37,000 nos. 28,000 nos.
Required: 1. Prepare production budget for the quarter. 2. Prepare a raw materials purchase budget for O, R and empty bags in quantity as well as in rupees. 3. Compute the budgeted variable cost of produce one bag of P. 4. Prepare a statement of budgeted net income for the quarter, and show both per unit and total cost data.
ILLUSTRATION 2:
A company manufactures three products namely A,B and C. The current pattern of sales of A, B and C is the ratio of 8:2:1 respectively. The relevant data
IILUSTRATION 1:
PYE Ltd produces and markets a very popular product called P. The company is interested in presenting its budget for the second quarter of the year. The following information is made available for this purpose. 1. Its expects to sell 50,000 bags of during the second quarter at a selling price of Rs 9 per kg 2. Each bag of P Requires 2.5 kgs of raw material Q and 7.5 kgs of raw material R. 3. Q costs Rs 1.20 per kg, R costs 20 paisa per kg and empty bag costs 80 paisa each 4. It requires 9 minutes of direct labour time to produce and fill one bag of P. Labour cost is Rs 5 per hour. 5. Variable manufacturing costs are Rs 0.45 per bag. Fixed manufacturing costs are Rs 30,000 per quarter. 6. Variable selling and administration expenses are 5% of sales, and fixed administration and selling expenses are Rs 25,000 per quarter. 7. Stock levels are planned as follows: Beginning of quarter End quarter
Finished bags of P 15,000 nos. 11,000 nos.
Raw material O 32,000 kgs. 26,000 kgs.
Raw material R 57,000 kgs. 47,000 kgs
Empty bags 37,000 nos. 28,000 nos.
Required: 1. Prepare production budget for the quarter. 2. Prepare a raw materials purchase budget for O, R and empty bags in quantity as well as in rupees. 3. Compute the budgeted variable cost of produce one bag of P. 4. Prepare a statement of budgeted net income for the quarter, and show both per unit and total cost data.
ILLUSTRATION 2:
A company manufactures three products namely A,B and C. The current pattern of sales of A, B and C is the ratio of 8:2:1 respectively. The relevant data