PAK Engineering produces two products, Cake and Coke. The budget for the forthcoming year to 31...

  

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PAK Engineering produces two products, Cake and Coke. The budget for the forthcoming year to 31 March 2008 is to be prepared. Expectations for the forthcoming year include the following. a) PAK ENGINEERING STATEMENT OF FINANCIAL POSITION AS AT 1 APRIL 2007 ASSETS GHS Non-Current assets Land and buildings Plant and equipment at cost Less accumulated depreciation Current assets Raw materials Finished goods Receivables Cash EQUITY AND LIABILITIES Equity Share capital Accumulated profits Current liabilities Payables b) Finished products The sales director has estimated the following. vi. i. ii. iii. iv. V. vii. Raw material content per unit of each product Material A Material B Demand for the company's products Selling price per unit Closing inventory of finished products at 31/03/2008 Opening inventory of finished products at 1/04/2007 Unit cost of this opening inventory Amount of plant capacity required for each unit of product Machining Assembling VIII. Direct labour hours required per unit of each product Finished goods are valued on a FIFO basis at full production cost c) Raw materials Supervisors' salaries Power Maintenance and running costs Consumables General expenses Office salaries General administration expenses h) Budgeted cash flows are as follows. Receipts from customers Payments: Materials Wages 1 187,000 75.000 7,000 33,000 Other costs and expenses 10,000 7,650 23,600 19,500 4.300 a) Sales budget b) Production budget (in quantities) 2 Quarter 1 70,000 c) Plant utilisation budget d) Direct material usage budget i. Closing inventory requirement in kilos at 31 March 2008. Opening inventory at 1 April 2007 in kilos ii. iii. Budgeted cost of raw materials per kilo Actual costs per kilo of opening inventories areas budgeted cost for the coming year. d) Direct labour The standard wage rate of direct labour is GHS1.60 per hour e) Production overhead Cake 4,500 units GHS32 400 units 900 units GHS20 15 min 12 min 1.5 kilos 2.0 kilos 6 hours Material A 600 10,000 4,400 2,100 e) Direct labour budget f) Factory overhead budget g) Computation of the factory cost per unit for each product h) Direct material purchases budget i) Cost of goods sold budget 1,100 GHS1.50 GHS 14,300 3.500 10,100 2.500 30.400 g) There is no opening or closing work in progress and inflation should be ignored. Machining department GHS Production overhead is absorbed on the basis of machining hours, with separate absorption rates for each department. The following overheads are anticipated in the production cost centre budgets. Quarter 2 Quarter 3 100,000 100,000 9,000 20,000 100,000 10,000 11,000 205,000 GHS 112,000 45,000 3,400 500 19,600 39.500 5,000 18,650 Depreciation is taken at 5% straight line on plant and equipment. A machine costing the company GHS20,000 is due to be installed on 1 October 2007 in the machining department, which already has machinery installed to the value of GHS100,000 (at cost). Land worth GHS180,000 is to be required in December 2007. f) Selling and administration expenses Sales commissions and salaries Travelling and distribution j) Cash budget k) A budgeted income statement account and statement of financial position 55.050 212,050 150,000 55,250 205,250 Required: Prepare the following for the year ended 31 March 2008 for PAK Engineering Ltd. 6.800 212.050 Coke 4,000 units GHS44 1,200 units 200 units GHS28 9 hours 24 min 18 min Material B 1,000 6,000 GHS1.00 0.5 kilos 4.0 kilos Assembling department GHS 9,150 2,000 2,000 Quarter 4 40,000 5,000 15,000 5,000 PAK Engineering produces two products, Cake and Coke. The budget for the forthcoming year to 31 March 2008 is to be prepared. Expectations for the forthcoming year include the following. a) PAK ENGINEERING STATEMENT OF FINANCIAL POSITION AS AT 1 APRIL 2007 ASSETS GHS Non-Current assets Land and buildings Plant and equipment at cost Less accumulated depreciation Current assets Raw materials Finished goods Receivables Cash EQUITY AND LIABILITIES Equity Share capital Accumulated profits Current liabilities Payables b) Finished products The sales director has estimated the following. vi. i. ii. iii. iv. V. vii. Raw material content per unit of each product Material A Material B Demand for the company's products Selling price per unit Closing inventory of finished products at 31/03/2008 Opening inventory of finished products at 1/04/2007 Unit cost of this opening inventory Amount of plant capacity required for each unit of product Machining Assembling VIII. Direct labour hours required per unit of each product Finished goods are valued on a FIFO basis at full production cost c) Raw materials Supervisors' salaries Power Maintenance and running costs Consumables General expenses Office salaries General administration expenses h) Budgeted cash flows are as follows. Receipts from customers Payments: Materials Wages 1 187,000 75.000 7,000 33,000 Other costs and expenses 10,000 7,650 23,600 19,500 4.300 a) Sales budget b) Production budget (in quantities) 2 Quarter 1 70,000 c) Plant utilisation budget d) Direct material usage budget i. Closing inventory requirement in kilos at 31 March 2008. Opening inventory at 1 April 2007 in kilos ii. iii. Budgeted cost of raw materials per kilo Actual costs per kilo of opening inventories areas budgeted cost for the coming year. d) Direct labour The standard wage rate of direct labour is GHS1.60 per hour e) Production overhead Cake 4,500 units GHS32 400 units 900 units GHS20 15 min 12 min 1.5 kilos 2.0 kilos 6 hours Material A 600 10,000 4,400 2,100 e) Direct labour budget f) Factory overhead budget g) Computation of the factory cost per unit for each product h) Direct material purchases budget i) Cost of goods sold budget 1,100 GHS1.50 GHS 14,300 3.500 10,100 2.500 30.400 g) There is no opening or closing work in progress and inflation should be ignored. Machining department GHS Production overhead is absorbed on the basis of machining hours, with separate absorption rates for each department. The following overheads are anticipated in the production cost centre budgets. Quarter 2 Quarter 3 100,000 100,000 9,000 20,000 100,000 10,000 11,000 205,000 GHS 112,000 45,000 3,400 500 19,600 39.500 5,000 18,650 Depreciation is taken at 5% straight line on plant and equipment. A machine costing the company GHS20,000 is due to be installed on 1 October 2007 in the machining department, which already has machinery installed to the value of GHS100,000 (at cost). Land worth GHS180,000 is to be required in December 2007. f) Selling and administration expenses Sales commissions and salaries Travelling and distribution j) Cash budget k) A budgeted income statement account and statement of financial position 55.050 212,050 150,000 55,250 205,250 Required: Prepare the following for the year ended 31 March 2008 for PAK Engineering Ltd. 6.800 212.050 Coke 4,000 units GHS44 1,200 units 200 units GHS28 9 hours 24 min 18 min Material B 1,000 6,000 GHS1.00 0.5 kilos 4.0 kilos Assembling department GHS 9,150 2,000 2,000 Quarter 4 40,000 5,000 15,000 5,000

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