Part 1 consider the following data in preparing ballarat

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Reference no: EM13347357

PART 1: Consider the following data in preparing Ballarat Furniture Company's budget for 2013:

Product specification for each table for 2013

 

 

Direct Materials

 

 

     Particle Board (PB)

9 board feet (bf)per table

 

     Red Oak       (RO)

10 board feet (bf) per table

 

 

 

 

Direct Manufacturing Labour

 

 

    Laminating labour

0.25 hours per table

 

    Machining labour

3.75 hours per table

 

 

 

 

Inventory information for 2013

Beginning Inventory

TargetEnding Inventory

PB

20,000 bf

18,000bf

RO

25,000 bf

22,000 bf

 

 

 

Finished goods - tables (units)

5,000

3,000

 

 

 

Sales forecast for 2013

 

 

Sales volume

52,000 tables

 

Sales price

$392 per table

 

 

 

 

Cost information:

2012

2013

PB per board feet

$3.90

$4.00

RO per board feet

$5.80

$6.00

Laminating labour per hour

$24.00

$25.00

Machining labour per hour

$29.00

$30.00

 

 

 

Variable manufacturing overhead costs

 

$1,900,000

Fixed manufacturing overhead costs

 

$1,600,000

Manufacturing overhead application base

 

Expected Direct Labour hours

Inventoriable (manufacturing) cost per table

$275

 

In addition to the above, the following selling and administrative expenses are expected for 2013:

Salaries of Sales personnel

$555,760

Marketing

$1, 920,720

Distribution

$729,600

Customer service

$504,992

Administrative

$440,768

Required:

Prepare an annual budget for Ballarat Furniture Company for 2013. Assume an income tax rate of 40 percent. Include the following schedules:

a. Sales budget

b. Production budget (in units)

c. Direct materials usage budget (in units  and in dollars)

d. Direct labour budget

e. Budgeted income statement.

PART 2

Three readings on Budgeting posted on Moodle.

Critically review the above.  Do you agree, partly agree or disagree with the issues raised in the above? Give your views on the issues that are raised in a, b and c.

Reference no: EM13347357

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