Prepare the production budget

Reference no: EM131627035

Assessment task

Assignment Question - Marshell Ltd produces a subassembly used in the production of forklifts. The assembly is sold to engine manufacturers and forklift maintenance facilities. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (2018). The master budget will be based on the following information:

(a) The finished goods inventory was 64 000 units at 31 December 2017, each costing $332.12. The desired ending inventory for each month is 80% of the next month's sales.

(b) The data on materials used are as follows:

Direct material	Per-unit usage	Unit cost ($)
Metal	20 kg	16
Components	12 components	10

Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of next month's production needs. This is exactly the amount of material on hand on 31 December of the prior year.

(d) Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labour hours.)

	Fixed-cost component ($)	Variable-cost component ($)
Supplies	-	2.00
Power	-	1.00
Maintenance	60 000	0.80
Supervision	32 000	-
Depreciation	400 000	-
Taxes	24 000	-
Other	159 800	1.00

(e) The projected sales in units for the first five months of 2018 follow:

	January	February	March	April	May
Estimated unit sales	80 000	100 000	120 000	125 000	124 000

The selling price is $410 per unit. The sales for December 2017 are 75 000 units.

Assume the following in your answer:

Direct materials inventory and finished goods inventory are costed using the FIFO method.
There is no work-in-progress inventory at any given point in time.

REQUIRED:

Use two decimal places in calculations when appropriate and do not round up to the nearest dollar for example use direct labour cost per hour of $28.50 and not $29. Ensure your worksheets show such figures accordingly.

A. Design one input and the six output sheets as required in B below. Ensure your spreadsheets meet the "design of spreadsheets" and "formatting" requirements as stated above.

B. Prepare the following five (5) budgets for the first quarter of 2018. Show the monthly figures and the total for the quarter in separate columns.

1. Sales budget

2. Production budget. Show April in a column to the right of the "marks" column.

3. Direct material purchases budget. Show the calculations of Metal separate to that of Components.

4. Direct labour budget.

5. Overhead budget.

6. Prepare the ending finished goods inventory budget as at 31 March 2018. Show the unit cost of each component separately using two decimal places.

Attachment:- Assignment File.rar

Reference no: EM131627035

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Reviews

len1627035

9/5/2017 1:21:13 AM

Australian student, As per the requirements. You must use spreadsheets such as excel in Microsoft Office to answer Part B. You will lose a considerable amount of marks if you choose not to use spreadsheets and if you type in figures in the output sheets (budgets). In the past, some students have received zero for Part B because they did not read and follow the details and instructions, and typed in all the figures. Please note: marks are allocated for demonstrating your ability to design and use spreadsheets, thus for links between cells and worksheets, and for designing and using formulae. If you type in figures in cells in the budgets (output sheets), you will not receive any marks, even though the figures may be correct.

len1627035

9/5/2017 1:21:07 AM

You must submit your assignment electronically through the secure upload facility in the Moodle system. Please ensure your student name(s) and your student ID(s) appear on all documents you upload. If you do the assignment in a pair, only upload the file once in one student’s Moodle account. The marked assignment will be returned to that student’s account. Therefore, please contact the student who uploaded the pair file to get a copy of the marked assignment.

len1627035

9/5/2017 1:21:00 AM

Also please ensure you include your student ID(s) and name(s) in the saved file, followed by the appropriate .xls or .xlsx for your excel spreadsheet. For example: s0123456 Pat Jones.xlsx Be mindful that there is a 5% penalty per day for late submission. You will be penalised immediately with a full day’s penalty if you submit your assignment after the due time, even though you may only be a few hours late. The penalty is not proportioned to the number of hours you submit your assignment late.

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