MANCOSA: BCOM FINANCIAL MANAGEMENT YEAR 3 64 1.2 REQUIRED Use the information gi
ID: 2330552 • Letter: M
Question
MANCOSA: BCOM FINANCIAL MANAGEMENT YEAR 3 64 1.2 REQUIRED Use the information given below to prepare the following budgets of Product Chip and p for October 2018. Provide separate monetary columns for each product in each budget. Production Budget (units) Direct Labour Budget (Rand) 1.2.1 1.2.2 INFORMATION Chipnik Limited manufactures and sells two products, viz. Chip and Nik. The following inform available to determine the budget requirements for October 2018: Projected sales for October and November 2018 1. November October 15 000 units of Chip at R60 each 5 000 units of Nik at R120 each 12 000 units of Chip at R44 each 4 000 units of Nik at R84 each in a closing inventory equal to 20% of the budgeted sales The policy of Chipník Limited is to mainta the following month. 2. of 3. Direct labour hours required to produce one unit of each product and the rate per hour are as f Chip: 1 hour at R12 per hour Nik: 2 hours at R15 per hour.Explanation / Answer
Production budget (for October 2018)
Explanation:
Closing inventory is 20% of the budgeted sales of the next month. Hence, closing inventory in October will be 20% of 12,000 for Chip i.e 2,400 units and 20% of 4,000 for Nik i.e. 800 units.
In the same manner, closing inventory in September will be 20% of the budgeted sales of October and closing inventory of September will become opening inventory of October.
Closing inventory of Chip in September = 15,000 x 20%
= 3,000 units
Closing inventory of Nik in September = 5,000 x 20%
= 1,000 units
Direct labor budget for October 2018
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Chip Nik Sales 15,000 5,000 Add: Closing inventory 2,400 800 Less: Begining inventory -3,000 -1,000 Production units 14,400 4,800Related Questions
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