Sam is having discussions with a Croatian company that might supply him with folding chairs and tables for sports events. Sam has been quoted a price of 100 kuna per chair and 400 kuna per table. As Sam has queried the prices, he has been shown some assumptions on which the costings are based. Use the information in Table 12.7 to construct the following budgets for the company:

a) Total sales revenue and production budgets in units.

b) Raw material purchase budget in quantity and cost by each material type and in total, based on production units.

c) Direct labour budget based on production budget, in both cost and hours.

d) Use a departmental overhead rate to calculate the cost per chair and per table.

e) Use the cost of sales per unit, together with the budgeted sales units, to calculate a total cost of sales.

f) Prepare a budget income statement.

The factory overheads are charged to products on a direct labour hour rate, and further information is provided in Table 12.8.

Transcribed Image Text:

Table 12.7 Furniture budget: sales, inventory, and raw material assumptions Sales units Opening inventory in units Closing inventory in units Chair Table 12,500 4,000 1,200 230 1,000 320 Raw material requirements: Plastic 3 kg 5 kg Aluminium 1.5 kg 4 kg Bolts 8 bolts 16 bolts Units per direct labour hour 6 units 4 units