To prepare the budgets, first calculate the marginal production cost per unit to find sales units, as sales are in value, and inventories in value at marginal cost.

Marginal production cost = direct materials + direct labour + variable overheads.

Variable overhead rate = total variable overheads / budgeted labour hours = 6,000,000 / 600,000 = GH¢10 per hour.

For Asana per unit: Materials: A 50kg * 2 = 100; B 100kg * 4 = 400; total mat 500 Labour hours: Dept X 5 hrs, Y 4 hrs, total 9 hrs Labour cost: X 520 =100; Y 440 =160; total labour 260 Variable OH: 9 hrs *10 =90 Marginal cost Asana = 500 +260 +90 =850

For Pito: Materials: A 1002=200; B 504=200; total mat 400 Labour hours: X 4 hrs, Y 5 hrs, total 9 hrs Labour cost: X 420=80; Y 540=200; total 280 Variable OH: 9*10=90 Marginal cost Pito =400 +280 +90=770

Sales price = marginal cost + 20% markup. Asana price =850 *1.2 =1,020 Pito =770 *1.2 =924

Sales units = sales value / price Asana sales units =15,000,000 /1,020 ≈14,706 units (note: assuming GH¢ not ‘000, but data has GH¢’000, but inventories 720’000, but to match, perhaps all in ‘000.

The sales is GH¢’000 15,000, so 15,000,000 But units 15,000,000 /1,020 =14,706 units

Opening inventory Asana =720,000 /850 ≈847 units (720/0.85=847.06, approx 847

Closing Asana =432/850 ≈508 units

Pito opening 840/770 ≈1,091 units

Closing 798/770 ≈1,036 units

To be exact, let’s use code_execution for precise.

But since closed-ended math, explain.

Assuming the values are in GH¢, but labeled ‘000, but to have whole units, perhaps sales is GH¢15,000,000, inventories GH¢720,000.

Calculation:

First, marginal cost Asana 850 GH¢ per unit

Sales Asana 15,000,000 / (850*1.2) =15,000,000 /1,020 ≈14,705.88, say 14,706 units

Opening inventory 720,000 /850 =847.058, say 847 units

Closing 432,000 /850 =508.235, say 508 units

For Pito 20,000,000 /924 ≈21,645.02, say 21,645 units

Opening 840,000 /770 =1,090.91, say 1,091

Closing 798,000 /770 =1,036.36, say 1,036

To be precise, perhaps the ‘000 is for thousands, but numbers are designed for exact.

Let’s check if markup is on marginal cost, yes.

Perhaps sales is GH¢15,000 ‘000 =15,000,000

Yes, and units are fraction, but in budgets, we use exact.

But for answer, I’ll use rounded, but to be accurate, let’s calculate exact.

Notice the sales 15,000 ‘000, but perhaps it’s GH¢15,000,000.

But for production budget: production = sales + closing – opening

So, need units.

Let’s calculate the sales units exactly.

For Asana, price 1,020 GH¢

Sales value 15,000,000

Units =15,000,000 /1,020 =14,705.882

But opening 720,000 /850 =847.0588

Closing 432,000 /850 =508.2353

Perhaps the numbers are designed to be exact, perhaps I have unit error.

The data has GH¢’0000 for sales, but perhaps it’s GH¢’000 for all.

Look at the original, “GHe’0000” for sales, perhaps it’s GH¢000, but to make units whole, perhaps sales is 15,000 (GH¢000), so 15,000,000 GH¢.

But units 15,000,000 /1,020 =14,705.88, not whole.

Perhaps the markup is on cost, but to find, perhaps calculate back from inventories.

Perhaps the inventories are in GH¢’000, and sales in GH¢’000.

But to have whole units, perhaps assume large numbers.

For the budget, we can use the numbers as is, with fractional units, but in practice, round.

But for exam, probably they are exact.

Let’s calculate the marginal cost again.

Direct materials A 2 GH¢ per kg, Asana 50 kg =100 GH¢

B 4 per kg, 100 kg =400 GH¢

Labour X 20 per hr, 5 hrs =100

Y 40 per hr, 4 hrs =160

Variable OH 10 per hr, 9 hrs =90

Total 100+400+100+160+90 =850 yes.

Perhaps the sales is 15,000 ‘000 =15,000 thousand GH¢ =15,000,000 GH¢

Units =15,000,000 /1,020 =14,705.88

Perhaps round to 14,706 units

Opening 720,000 /850 =847.06 ≈847

Closing 432,000 /850 =508.24 ≈508

Production =14,706 +508 -847 =14,367 units

Similarly for Pito.

To be precise, perhaps use exact fractions, but in answer, I’ll use rounded.

For (b) direct materials cost budget, that is for production.

For (c) purchases = usage + closing – opening, but no inventory for materials given, so perhaps assume no stock of materials, or the budget is for production cost, but purchases budget is for materials, so assume zero opening/closing for materials, as not given.

The question has no materials inventory info, so purchases = usage.

Yes, common in such questions.

For labour, utilization is hours.

Let’s prepare.

First, calculate units.

To make exact, perhaps the sales is in GH¢, but that is small, no.

The handbook is old, perhaps the numbers are to be used as is, with ‘000.

To get whole numbers, notice the inventories are valued at marginal cost, so units can be calculated exactly as 720 /0.85 =847.058, but perhaps it’s intended to be GH¢ , but let’s use exact.

Let’s calculate the number of units.

For Asana sales units = (sales value) / price = 15,000 /1,020 =14.70588 thousand units? No, if sales is 15,000 ‘000, it’s 15,000 thousand GH¢.

The label is GHe’0000, perhaps typo for GH¢’000.

Assume the numbers are in thousands, but to have, perhaps multiply all by 1,000 to make whole.

Perhaps the problem expects to calculate the marginal cost in GH¢, and sales in GH¢’000, but units in thousands.

But to resolve, perhaps the sales is 15,000,000 GH¢, units 14,706 for Asana, but use exact.

For the answer, I’ll calculate as follows:

First, marginal cost Asana 850 GH¢

Price 1,020 GH¢

Sales value 15,000,000 GH¢

Sales units =15,000,000 /1,020 =14,705.88 units

Opening units =720,000 /850 =847.06 units

Closing units =432,000 /850 =508.24 units

Production units = sales + closing – opening =14,705.88 +508.24 -847.06 =14,367 units

Similarly for Pito price 924 GH¢

Sales units =20,000,000 /924 =21,645.02 units

Opening =840,000 /770 =1,090.91 units

Closing =798,000 /770 =1,036.36 units

Production =21,645.02 +1,036.36 -1,090.91 =21,590.47 units

This is not nice, perhaps the ‘0000 is typo, and it’s GH¢’000 for sales, but inventories GH¢’000, but same.

Perhaps the markup is 20% on cost, but to find units, perhaps the inventories are in GH¢’000, sales in GH¢’000.

So sales Asana 15,000 (‘000) =15,000,000 GH¢

Yes, same.

Perhaps the problem is to calculate without rounding, but in exam, they expect rounded.

Perhaps the variable OH is included in marginal cost for markup.

Yes, marginal cost includes variable OH.

Perhaps to make whole, let’s assume the numbers are such, and use rounded numbers for budget.

For (a) Production budget in units

Asana: sales 14,706 units + closing 508 – opening 847 =14,367 units

Pito: 21,645 +1,036 -1,091 =21,590 units

(b) Direct materials cost budget (for production)

For A: Asana 14,367 *50 kg *2 GH¢ =14,367 *100 =1,436,700

Pito 21,590 *100 kg *2 =21,590 *200 =4,318,000

Total A cost 5,754,700

For B: Asana 14,367 *100 *4 =14,367 *400 =5,746,800

Pito 21,590 *50 *4 =21,590 *200 =4,318,000

Total B cost 10,064,800

Total direct materials cost 5,754,700 +10,064,800 =15,819,500 GH¢

(c) Direct materials purchases budget

Since no opening/closing stock for materials given, purchases = usage, so same as cost budget, 15,819,500 GH¢

But the budget is for quantity or cost? The question says direct materials purchases budget, probably cost or quantity.

Typically cost.

(d) Direct labour utilization budget (hours)

Asana production 14,367 units

Dept X: 14,367 *5 =71,835 hrs

Dept Y: 14,367 *4 =57,468 hrs

Pito 21,590 units

Dept X: 21,590 *4 =86,360 hrs

Dept Y: 21,590 *5 =107,950 hrs

Total X 71,835 +86,360 =158,195 hrs

Total Y 57,468 +107,950 =165,418 hrs

Total labour hours 323,613 hrs

(e) Direct wages cost budget

Dept X total hrs 158,195 *20 =3,163,900 GH¢

Dept Y 165,418 *40 =6,616,720 GH¢

Total wages 9,780,620 GH¢

Explanation: First, calculated marginal cost per unit as above, then price = marginal cost *1.2

Then units = sales value / price (sales value =15,000 *1,000 =15,000,000 GH¢ for Asana, similar for Pito)

Opening and closing units = inventory value / marginal cost per unit

Production = sales units + closing units – opening units

For materials cost, production units * per unit kg * price per kg

For purchases, as no stock info, = cost

For labour utilization, production units * hours per unit

For wages, hours * rate

Note: Rounded to whole units for practicality, as fractional units not typical, but in exact, use decimal.

In Ghanaian budgeting, this supports operational planning, aligning with BoG’s sustainable banking principles for efficient resource use.