Tornado uses a budgeting system to control the costs and revenues of its only product, the...

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Tornado uses a budgeting system to control the costs and revenues of its only product, the Delta. The management accountant for Tornado has asked for your assistance in producing the budget for the year ending 31 December 20X4. He has provided you with the following information: The standard cost card for the Delta for the year ending 31 December 20X4 is as follows: £ Selling price Direct material (4 kg at £8.00 per kg) 250 (32) Direct labour (6 hours at £15.00 per hour) (90) Contribution 128 Tornado uses an additive time series analysis to forecast sales volume. The trend in sales and forecast seasonal variations for 20X4 are given below: Quarter 1 4 Trend (sales units) Seasonal variation (sales units) 1,200 1,300 1,400 1,500 -150 +200 +300 -350 The sales trend figures for the first two quarters of 20X5 are estimated at 1,600 and 1,700 units respectively. Quarterly seasonal variations are expected to be as for 20X4. It is the policy of Tornado to always carry sufficient inventory of finished goods to meet 50% of the next quarter's forecast sales, and sufficient raw materials to meet 80% of next quarter's forecast production. Required: Produce the following budgets for each of the four quarters of the year ending 31 December 20X4: (a) Sales budget showing sales units and sales revenue (b) Production budget in units (c) Purchasing budget in kg and £ (d) Labour budget in hours and £ Note: you are not required to produce annual totals and a quarter is a period of three months. Tornado uses a budgeting system to control the costs and revenues of its only product, the Delta. The management accountant for Tornado has asked for your assistance in producing the budget for the year ending 31 December 20X4. He has provided you with the following information: The standard cost card for the Delta for the year ending 31 December 20X4 is as follows: £ Selling price Direct material (4 kg at £8.00 per kg) 250 (32) Direct labour (6 hours at £15.00 per hour) (90) Contribution 128 Tornado uses an additive time series analysis to forecast sales volume. The trend in sales and forecast seasonal variations for 20X4 are given below: Quarter 1 4 Trend (sales units) Seasonal variation (sales units) 1,200 1,300 1,400 1,500 -150 +200 +300 -350 The sales trend figures for the first two quarters of 20X5 are estimated at 1,600 and 1,700 units respectively. Quarterly seasonal variations are expected to be as for 20X4. It is the policy of Tornado to always carry sufficient inventory of finished goods to meet 50% of the next quarter's forecast sales, and sufficient raw materials to meet 80% of next quarter's forecast production. Required: Produce the following budgets for each of the four quarters of the year ending 31 December 20X4: (a) Sales budget showing sales units and sales revenue (b) Production budget in units (c) Purchasing budget in kg and £ (d) Labour budget in hours and £ Note: you are not required to produce annual totals and a quarter is a period of three months.

Answer rating: 100% (QA)

1 Sales Budget 20x4 20x5 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Trends 1200 1300 1400 1500 1600 Seasonal Vari... View the full answer