Prepare a sales budget incorporating the above information

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Reference no: EM131137709

A. Given that total budgeted overheads = Shs.240,000

Production budget is as follows:

Product

                  A

           B

i)

Units

20,000

10,000

ii)

Labour hours

20,000

20,000

iii)

Labour cost

17,500

22,500

iv)

Machine hours

45,000

15,000

v)

Material cost

15,000

25,000

Required: The overhead absorption rater per unit of A and B using the following methods:

a) Unit method

b) Percentage on material cost.

c) Percentage on labour cost.

d) Percentage On prime cost.

e) Labour hour rate.

f) Machine hour rate.                    

A. Use the following information to prepare income statements using absorption costing and marginal costing.                                                                                                                                 

Kshs.

Direct Material cost per unit                                                                5

Direct labour cost per unit                                                                  9

Variable manufacturing overhead per unit.                                          0.60

Total fixed manufacturing overhead per year                                      96000

Number of units produced per year                                                    10000

Sale price per unit                                                                            35

Units sold                                                                                        8000

Variable selling and administration expenses per unit                          1.20

Fixed administration and selling expenses                                          58000

Explain the difference in profits calculated in above.

B. Kwetu enterprises sell two products X and Y. During the year 2015, it plans to sell the following quantities of each product.

Sales budget (in units)

Total           Quarter 1                Quarter 2                    Quarter 3                             Quarter 4

X 7000            9000                        2300                           3000                                     8000

Y 3000            8500                        7500                           5500                                     8500

Each of these two products is sold on a seasonal basis. Product A tends to sell better in summer months, while product B sells better during winter. X is sold at sh.10 per unit while Y at a price of sh.20 per unit throughout the year.

A study of the past experience reveals that KituKidogo enterprises has lost about 3% of its invoice each year because of returns (constituting 2% loss of revenue) allowances and bad debts

Required:

I. Prepare a sales budget incorporating the above information.

Reference no: EM131137709

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