Question 1 TinyTom makes one product, which sells for $70 each, and prepares functional budgets on a monthly basis. For the first three months of 2021, the following figures are proposed: Sales January 10,000 units 14,000 units February March 12,000 units April 10,000 A closing stock of 10% of the next month's sales is required, the forecast sales for April is 10,000 units. The standard material cost of one unit of finished product is: Material X 4 units at $2 per unit Material Y 8 units at $3 per unit 2 unit at $5 per unit Material Z The standard direct labour cost of one unit of finished product is: Department A 4 hours at $5 per hour Department B 4 hours at $5 per hour 2 hours at $4 per hour Department C Material Material X Y Z 75,000 80,000 15,000 Opening Stock Closing Stock 60,000 75,000 12,500 Required: 1) Calculate the standard prime cost of one unit of finished product. ii) Calculate the Sales Budget for each of months. iii) Calculate the Production Budget for each of months.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter8: Budgeting For Planning And Control
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Question 1
TinyTom makes one product, which sells for $70 each, and prepares functional budgets on a
monthly basis. For the first three months of 2021, the following figures are proposed:
Sales
January
10,000 units
February
14,000 units
March
12,000 units
10,000
April
A closing stock of 10% of the next month's sales is required, the forecast sales for April is 10,000
units.
The standard material cost of one unit of finished product is:
Material X
4 units at $2 per unit
Material Y
8 units at $3 per unit
Material Z
2 unit at $5 per unit
The standard direct labour cost of one unit of finished product is:
4 hours at $5 per hour
Department A
Department B
Department C
4 hours at $5 per hour
2 hours at $4 per hour
Material
X
Y
Material
Opening Stock
Closing Stock
75,000
80,000
15,000
60,000
75,000
12,500
Required:
1) Calculate the standard prime cost of one unit of finished product.
ii) Calculate the Sales Budget for each of months.
iii) Calculate the Production Budget for each of months.
iv) Calculate the Materials usage Budget for each material for each of months and in total.
v) Calculate the Material Purchase Budget for each material.
vi) Calculate the labour hours and cost.
N
Transcribed Image Text:Question 1 TinyTom makes one product, which sells for $70 each, and prepares functional budgets on a monthly basis. For the first three months of 2021, the following figures are proposed: Sales January 10,000 units February 14,000 units March 12,000 units 10,000 April A closing stock of 10% of the next month's sales is required, the forecast sales for April is 10,000 units. The standard material cost of one unit of finished product is: Material X 4 units at $2 per unit Material Y 8 units at $3 per unit Material Z 2 unit at $5 per unit The standard direct labour cost of one unit of finished product is: 4 hours at $5 per hour Department A Department B Department C 4 hours at $5 per hour 2 hours at $4 per hour Material X Y Material Opening Stock Closing Stock 75,000 80,000 15,000 60,000 75,000 12,500 Required: 1) Calculate the standard prime cost of one unit of finished product. ii) Calculate the Sales Budget for each of months. iii) Calculate the Production Budget for each of months. iv) Calculate the Materials usage Budget for each material for each of months and in total. v) Calculate the Material Purchase Budget for each material. vi) Calculate the labour hours and cost. N
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