- 20 Marks
Question
WXYZ produces and sells one single product X and 30% of the monthly demands is kept as closing inventory for each month. The following information was obtained from the company‟s records:
Standard cost card
X Material A (Kg) (₦5/Kg) 4Kg Material B (Kg) (₦4/Kg) 1Kg Direct labour (hrs) (₦10/hr) 3Hrs Direct cost (₦) ₦22 Selling price per Unit ₦120
The demand for the next quarter in units is estimated as follows:
Closing inventory as at end of current quarter are
X April 40,000 May 35,000 June 50,000
Material A 60,000Kg Material B 15,000Kg Finished Goods X 20,000 Units
Required: Prepare for April, May and June:
a. Production budget in quantity
(5 Marks)
b. Material purchase budget for production in quantity and value (12 Marks)
c. Direct labour budget
(3 Marks)
Answer
| April | May | June | |
|---|---|---|---|
| Units | Units | Units | |
| Opening inventory | (20,000) | (12,000) | (10,500) |
| Demand | 40,000 | 35,000 | 50,000 |
| 20,000 | 23,000 | 39,500 | |
| Closing inventory | 12,000 | 10,500 | 15,000 |
| Production | 32,000 | 33,500 | 54,500 |
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