Magnet Ltd sells standard kitchen accessories in West London. Magnet Ltd is a centralized organization which...

 

 

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Magnet Ltd sells standard kitchen accessories in West London. Magnet Ltd is a centralized organization which adopts a traditional budgeting system. Budgets are based on previous year's figures rolled forward and adjusted by adding or subtracting amounts depending on output. Each unit of production is sold at 250. For the first quarter of 2022. predicted units of production and sales are as follows: January 2022 Sales in units 1,000 Production in units 1.200 February 2022 1,000 1,200 March 2022 1,200 1,200 Based on previous year budget, in the second quarter of 2022 production in units is expected to be 1.260 units each month. Customers pay 60% in the month of the sale and 40% in the following month. Each unit of production requires: 2 kilograms (kg) of raw materials (20 per kg), two labour hours (20 per labour hour) and variable production overheads (10 per unit produced). In each month of the first quarter of 2022. closing inventories of raw materials (in kg) will be equal to 80% of the requirements of raw materials for following month's production. There is no opening inventories of raw material in January 2022. Purchases of raw materials are paid for in the month after purchase. Labour costs are paid in the month they are incurred. Variable production overheads are paid in the month they are incurred. Other costs Fixed production overheads will be 17.000 per month, paid when incurred. Marketing expenses will be 120,000 in January, 60% paid when incurred, 40% paid in the following month. Magnet Ltd sells standard kitchen accessories in West London. Magnet Ltd is a centralized organization which adopts a traditional budgeting system. Budgets are based on previous year's figures rolled forward and adjusted by adding or subtracting amounts depending on output. Each unit of production is sold at 250. For the first quarter of 2022. predicted units of production and sales are as follows: January 2022 Sales in units 1,000 Production in units 1.200 February 2022 1,000 1,200 March 2022 1,200 1,200 Based on previous year budget, in the second quarter of 2022 production in units is expected to be 1.260 units each month. Customers pay 60% in the month of the sale and 40% in the following month. Each unit of production requires: 2 kilograms (kg) of raw materials (20 per kg), two labour hours (20 per labour hour) and variable production overheads (10 per unit produced). In each month of the first quarter of 2022. closing inventories of raw materials (in kg) will be equal to 80% of the requirements of raw materials for following month's production. There is no opening inventories of raw material in January 2022. Purchases of raw materials are paid for in the month after purchase. Labour costs are paid in the month they are incurred. Variable production overheads are paid in the month they are incurred. Other costs Fixed production overheads will be 17.000 per month, paid when incurred. Marketing expenses will be 120,000 in January, 60% paid when incurred, 40% paid in the following month.