Rimham plc prepares its budgets annually and as the accountant you are responsible for this task. The following standard data is available:

• Production overheads are absorbed on the direct labour hour rate method.
• Administration and selling overheads are absorbed as a percentage of production cost at the rates of 50 per cent and 25 per cent, respectively.
• Profit is estimated at 121/2 per cent on budgeted selling price.
• Sales, at standard selling price, for the following year are budgeted as follows:
• In order to meet the needs of an expansion programme the company considers it necessary to increase stocks as follows:

You are required to prepare the following:

(a) A schedule giving a detailed standard cost and standard selling price per unit for each product.

(b) The sales budget in units.

(c) The production budget in units.

(d) The direct material purchases budget in both units and value.

Transcribed Image Text:

Material content Material 1 Material 2 Material 3 Material 4 Material prices Material 1 Material 2 Material 3 Material 4 Labour content Department A Department B Labour rates Department A Department B Additional budgeted information Direct labour hours Production overheads Product X kg - 4 12 8 Price per kg £ 0.1 0.15 0.25 0.05 Product X hours 2.5 2.5 Rate per hour £ 1.6 1.2 635,000 £1,143,000 Product Y kg 18 14 10 Product Y hours 1.5 1.5 Product Z kg 24 168 - 18 Product Z hours 3 3