QUESTION THREE: BUDGETING IN A MANUFACTURING FIRM Victoria Square Cleaners Pty Ltd produces two cleaning products...

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QUESTION THREE: BUDGETING IN A MANUFACTURING FIRM Victoria Square Cleaners Pty Ltd produces two cleaning products and sells them to industrial cleaning businesses. Budget estimates for the coming year are as follows. Finished goods Sales volume Selling price Product (units) Miracle 120,000 Foamy 385,000 Direct material per unit $85.00 $50.00 Inventory beginning of year Required inventory end of year (units) (units & dollars) 1,000 12,750 2,000 @ $45= $90,000 2,750 @ $20 $55,000 Direct material per unit of finished product (litres) Required inventory Inventory beginning of Cost per end of year year Material litre Miracle Foamy (litres) (litres) Alpha $1.50 Beta $1.00 Gamma $3.00 Delta $2.50 6426 3 30,000 20,000 1 5,000 4,250 2 3,000 5,500 0 5,000 8,000 Direct labour Direct labour hours Average cost per Process Miracle Foamy direct labour hour Blending per batch 3.0 1.2 $25.00 + Packaging per batch 0.3 0.2 $20.00 = Direct labour hours per batch 3.3 1.4 Batch size (units) 33 35 = Direct labour hours per unit 0.1 0.04 ? Manufacturing overhead Item Indirect labour Amount $371,502 Indirect material 198,500 Electricity 400,569 Repairs and maintenance 746,823 Rates and insurance 300,599 Factory rental 1,200,000 Depreciation: Manufacturing equipment 1,400,600 Other 750,000 Additional information i. ii. iii. Estimated selling and administrative expenses for the forthcoming year are $12,400,500. Victoria Square Cleaners' management accountants allocate manufacturing overhead using a predetermined rate based on the number of direct labour hours per unit of product. Victoria Square Cleaners accounts for its inventories (both finished goods and raw materials) on a first in, first out (FIFO) basis. Required (a) Prepare a sales budget for the forthcoming year. [3 Marks] (b) Prepare a production budget for the forthcoming year. [4 Marks] (c) Prepare a direct materials budget for the forthcoming year. [4 Marks] (d) Prepare a direct materials purchases budget for the forthcoming year. [5 Marks] (e) Calculate the direct labour cost per unit for both products. [4 Marks] (f) Prepare a direct labour budget for the forthcoming year. [4 Marks] (g) Determine the budgeted cost of manufacturing a unit of both products during the forthcoming year. [5 Marks] (h) Prepare a cost of goods sold budget for the forthcoming year. [5 marks] (i) Prepare a budgeted statement of profit or loss for the forthcoming year in a generally accepted accounting principles (GAAP) format. [4 Marks] [Total 38 Marks] QUESTION THREE: BUDGETING IN A MANUFACTURING FIRM Victoria Square Cleaners Pty Ltd produces two cleaning products and sells them to industrial cleaning businesses. Budget estimates for the coming year are as follows. Finished goods Sales volume Selling price Product (units) Miracle 120,000 Foamy 385,000 Direct material per unit $85.00 $50.00 Inventory beginning of year Required inventory end of year (units) (units & dollars) 1,000 12,750 2,000 @ $45= $90,000 2,750 @ $20 $55,000 Direct material per unit of finished product (litres) Required inventory Inventory beginning of Cost per end of year year Material litre Miracle Foamy (litres) (litres) Alpha $1.50 Beta $1.00 Gamma $3.00 Delta $2.50 6426 3 30,000 20,000 1 5,000 4,250 2 3,000 5,500 0 5,000 8,000 Direct labour Direct labour hours Average cost per Process Miracle Foamy direct labour hour Blending per batch 3.0 1.2 $25.00 + Packaging per batch 0.3 0.2 $20.00 = Direct labour hours per batch 3.3 1.4 Batch size (units) 33 35 = Direct labour hours per unit 0.1 0.04 ? Manufacturing overhead Item Indirect labour Amount $371,502 Indirect material 198,500 Electricity 400,569 Repairs and maintenance 746,823 Rates and insurance 300,599 Factory rental 1,200,000 Depreciation: Manufacturing equipment 1,400,600 Other 750,000 Additional information i. ii. iii. Estimated selling and administrative expenses for the forthcoming year are $12,400,500. Victoria Square Cleaners' management accountants allocate manufacturing overhead using a predetermined rate based on the number of direct labour hours per unit of product. Victoria Square Cleaners accounts for its inventories (both finished goods and raw materials) on a first in, first out (FIFO) basis. Required (a) Prepare a sales budget for the forthcoming year. [3 Marks] (b) Prepare a production budget for the forthcoming year. [4 Marks] (c) Prepare a direct materials budget for the forthcoming year. [4 Marks] (d) Prepare a direct materials purchases budget for the forthcoming year. [5 Marks] (e) Calculate the direct labour cost per unit for both products. [4 Marks] (f) Prepare a direct labour budget for the forthcoming year. [4 Marks] (g) Determine the budgeted cost of manufacturing a unit of both products during the forthcoming year. [5 Marks] (h) Prepare a cost of goods sold budget for the forthcoming year. [5 marks] (i) Prepare a budgeted statement of profit or loss for the forthcoming year in a generally accepted accounting principles (GAAP) format. [4 Marks] [Total 38 Marks]