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(appendix) Sales, production and purchases budgets; activity-based overhead; manufacturer
George Ltd manufactures and sells two different types of colls used in electric motors, in September, Jessica
Martin, the management accountant, compiled the following data for the upcoming annual budget.
Use of direct material;
Amount used per unit
Direct material
Sheet metal
Copper wire
Platform
2 kilograms
Heavy coll
5 kilogrim
3 kilograms
1 unit
Row material prices and inventory levels:
Raw material
Sheet metal
Anticipated purchase
Expected inventorles
price
1 January
$8
32 000 kilograms
Desired inventories 31
December
36 000 kilogrums
Copper wire
Platform
$S
$3
29 000 kilograms
6 000 units
32 000 kilograms
7 000 unite
Direct labour requirements and rates:
Product
Hours per unit
2
Rate per hour
Light coil
Heavy coil
$30
$40
Manufacturing overhead:
Activity
Material handling:
Cost per unit of activity driver
Sheet metal and copper wire
Platforms
Machine related
Shipping
General manufacturing overhead
$0,50 per kg of raw material purchased
$0,10 per unit purchased
$1.50 per machine hour*
$2.00 per coil shipped
$1.20 per direct labour hour
* Total annual machine hours are 100 000 for light colls and 200 000 for heavy colls,
Finished goods inventories (in units):
Product
Light coil
Heavy coil
Expected 1 January
Desired 31 December
20 000
25 000
8 000
9 000
Sales forecast:
Product
Light coil
Heavy coil
Units
60 000
40 000
Price
$130
$190
11
Required:
Prepare the following budgets;
1. sales budget (in dollars)
2. production budget (in units)
3. direct material purchases budget (in quantities)
4. direct material purchases budget (in dollars)
5. direct labour budget (in dollars)
6. manufacturing overhead budget (in dollars).
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