King & Co. produces camping refrigerators. The plan for the next four months is the following:...

 

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King & Co. produces camping refrigerators. The plan for the next four months is the following: The company plans to sell 50,000 units per month for April, May, and June, and 40,000 units for March of 2021. The selling price will be set at $45 per unit. It is planned that Finished Goods inventory on March 1 will be 12,000 units at $279,375. The company follows a policy requiring ending finished goods inventory each month to be 30% of next month's sales. There is no WIP. The inventory of raw materials on March 1 was 17,000kg. The policy is that the ending inventory amounts to 15% of next month's production requirements. · The company plans $55,000 of selling & administrative expenses (including $12,000 of depreciation) plus 5% of sales for commissions. ■ Additional data relating to manufacturing costs for April 2021 is as below: Direct Materials 2 kg per unit @ $14 per kg Direct Labour (DLH) 15 minutes per unit @ $24 per hour allocated @$4 per DLH Variable Manufacturing Overhead . Budgeted fixed manufacturing overhead is $104,000 (based on practical capacity of 52,000 units per month) and excludes $45,000 of depreciation. REQUIRED: 1. Prepare the following budgets for March and April 2021: (5 marks) (i) Production Budget (ii) Material Purchases Budget King & Co. produces camping refrigerators. The plan for the next four months is the following: The company plans to sell 50,000 units per month for April, May, and June, and 40,000 units for March of 2021. The selling price will be set at $45 per unit. It is planned that Finished Goods inventory on March 1 will be 12,000 units at $279,375. The company follows a policy requiring ending finished goods inventory each month to be 30% of next month's sales. There is no WIP. The inventory of raw materials on March 1 was 17,000kg. The policy is that the ending inventory amounts to 15% of next month's production requirements. · The company plans $55,000 of selling & administrative expenses (including $12,000 of depreciation) plus 5% of sales for commissions. ■ Additional data relating to manufacturing costs for April 2021 is as below: Direct Materials 2 kg per unit @ $14 per kg Direct Labour (DLH) 15 minutes per unit @ $24 per hour allocated @$4 per DLH Variable Manufacturing Overhead . Budgeted fixed manufacturing overhead is $104,000 (based on practical capacity of 52,000 units per month) and excludes $45,000 of depreciation. REQUIRED: 1. Prepare the following budgets for March and April 2021: (5 marks) (i) Production Budget (ii) Material Purchases Budget

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