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RBS Engineering Ltd produces two products, Tab and Enter. The budget for the forthcoming year to 30 June 2019 is to be prepared. Expectations for the forthcoming year include the following:

1. Finishedgoods

The sales director has estimated the following:

	Tab	Enter
Demand (units)	4,500	4,000
Selling price per unit	$32	$44
Closing inventory at 30 June 2019 (units)	400	1,200
Opening inventory at 01 July 2018 (units)	900	200

2. Rawmaterials

	Tab	Enter
Material A per unit (kilos)	1.5	0.5
Material B per unit (kilos)	2.0	4.0
Purchase cost of raw materials per kilo	$1.50	$1.00

	Material A	Material B
Closing inventory at 30 June 2019 (kilos) Opening inventory at 01 July 2018 (kilos)	600 1,100	1,000 6,000

3. Directlabour

	Tab	Enter
Direct labour hours per unit Rate per hour	6 $1.60	9 $1.60

4. Plant capacity and runningcosts

	Tab	Enter
Amount of plant capacity required per unit Running cost per hour	27 min $10	42 min $10

5. Overheads for theyear

	$
Production overhead
Supervisors salaries	19,150
Power	6,400
Maintenance and running costs	4,100
Consumables	13,900
General expenses	24,600
Selling and administration expenses
Sales commissions and salaries	14,300
Travelling and distribution	3,500
Office salaries	10,100
General administration expenses	2,500

Required:

1. Sales budget (totalsales)

2. Production budget (for finishedgoods)

3. Raw materials budget (totalpurchases)

4. Direct labour budget (total labourcosts)

5. Plant utilisation budget (total plant runningcosts)

6. Budgeted statement of profit or loss (complete formatbelow)

7. Calculate the variances, supported with analysis andcomments.

	Budget $	Actual $	Variance ($)
Sales		325,000
Materials costs		45,000
Labour costs		117,300
Plant running costs		53,000
Production overheads		72,450
Selling and administration overheads		32,400
Profit		4,850

8. Recommend actions and strategies that RBS Engineering Ltd can adopt to reduce costs and improvequalityandproductivityinthishighlycompetitiveworld.Youranswershouldinclude an assessment of each strategy as well any difficulties that mayarise.

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