Saturday, January 26, 2019

ACC/BUS 301 (COST AND MANAGEMENT ACCOUNTING 1) - QUESTION WITH SOLUTION ON MASTER BUDGET


FOR WHOM: SWUN CONVERSION STUDENTS

QUESTION
Motungbede Engineering manufactures three products for the building industry. The budgeted sales of products known as P, W and X for the budgeted periods 1 are:
Product
Quantity
Price
P
4,000
N60
W
8,000
N70
X
6,000
N80
Materials used in the manufacture of the company`s products are:
Component Ref. No.
1922
2244
3366
4488
Component Unit Cost
N2.00
N3.00
N4.00
N5.00
Quantities Used:
P
W
X

5
4
3

3
4
2

1
2
1

2
3
5
Two types of labour are used, viz Assemblers and wires, the standard unit times for each product being:
Labours
Assemblies
Wires
Hourly Rate
50k
60k
P
3 hours
1.5 hours
W
4 hours
2 hours
X
5 hours
2.5 hours
Production overhead which is absorbed into product costs on a direct labour hour basis is budgeted as follows:
                                                                       N
Building Occupancy                                   30,050
Equivalent Utilisation                                 16,100
Personnel Services                                               12,150
Materials Handling                                       9,310
Production Planning and Control                 9,790
Selling and distribution costs budgeted for the period are:
                                                                         N
Representation                                           101,300
Sales Office                                                   30,100
Advertising and Publicity                                       29,100
and are charged to products in proportion to sales income of the period.
Stocks at the beginning of period 1 are expected to be:

Finished Goods
Quantity
Unit Cost (N)
P
W
X
1,000
3,000
2,000
39
51
51
Components:
1922
2244
3366
4488

40,000
20,000
10,000
30,000

2
3
4
5
Closing stocks at the end of period 1 are expected to be an increase of 10% and reduction of 20% on opening stocks of finished goods and components parts respectively.
You are required to:
(a) Prepare budget for:
i.        Sales in quantity and value
ii.       Production quantities
iii.      Material usage quantities
iv.      Material Purchase quantity and value
v.       Direct labour utilisation and cost
(b)     Prepare statement showing the valuation of finished stocks at the end of period.
(c)      Prepare budgeted profit for the period showing the amount of profit contributed by each product.

SOLUTION

.   (a.i)  Motungbede Engineering

                 Sales Budget
Product
Quantity
Selling Price(N)
Sales Volume(N)
P
4,000
60
240,000
W
8,000
70
560,000
X
6,000
80
480,000



1,280,000

 (a.ii) Motungbede Engineering
      Production Budget
Product
Sales Budget
Stock Increase
Production
P
4,000
100
4,100
W
8,000
300
8,300
X
6,000
200
6,200



18,600

(a.iii)  Motungbede Engineering
        Material Usage Budget Components
Product
1922
2244
3366
4488
P
20,500
12,300
4,100
8,200
W
33,200
33,200
16,600
24,900
X
18,600
12,400
6,200
31,000

72,300
57,900
26,900
64,100

(a.iv)  Motungbede Engineering
        Material Purchases Budget
Components
1922
2244
3366
4488
Total
Budgeted Usage
72,300
57,900
26,900
64,100

Stock decrease
(8,000)
(4,000)
(2,000)
(6,000)


64,300
53,900
24,900
58,100

Cost Price
N2
N3
N4
N5

Purchase
N128,600
N161,700
N99,600
N290,500
N680,400
  (a.v)   Motungbede Engineering
            Direct Labour Utilisation and Cost Budget
Product
Production Budget
Assemblers
Wires
Total
P
4,100
12,300
6,150

W
8,300
33,200
16,600

X
6,200
31,000
15,500



76,500
38,250

Budgeted Labour Rate Per Hour

50k
60k

Total Direct Labour Cost

N38,250
N22,950
N61,200

(b)  Motungbede Engineering
       Finished Stock Valuation
Product
Quantity
Unit Cost
Stock Value (N)
P
1,100
39
42,900
W
3,300
51
168,300
X
2,200
51
112,200



323,400





  (c) Motungbede Engineering
      Budgeted Profit Statement

P
W
X
Total
Sales Units
4,000
8,000
6,000

Selling Price Per Unit
N60
N70
N80


N
N
N
N
Sales Revenue
240,000
560,000
480,000
1,280,00
Production Costs:
Material
Labour
Production Overhead
Selling and Distribution

128,600
9,840
12,445
30,090

161,700
26,560
33,590
70,220

99,600
24,800
31,565
60,190

389,900
61,200
77,400
160,500

59,025
267,930
264,045
591,000



Train your brain click below link: 
https://britstutors.blogspot.com/2018/10/train-your-brain.html
 
ONCE YOU CARRY YOUR OWN WATER, YOU WILL LEARN THE VALUE OF EVERY DROP.  
TIME IS KEY! MAKE BEST USE OF YOUR TIME FOR THINGS THAT IS NECESSARY!
Patriot Odunaro B.J


No comments:

Post a Comment

Most Popular Post