Springton makes and sells a single product, black handbags, at a price of $1,600 each. During the three months to December 31,2020, he sold 1,500 handbags and turnover was the same for each month.

He expects the volume of sales to remain unchanged for January 2021 but to increase by 5% in February, and by a further 20% in April.The price of the handbags will be increased by 10% in January and by a further 5% in June.

The following budgeted information is presented to assist in the preparation.

Month

Budgeted sales

$

Budgeted purchases

$

January

880,000

600,000

February

924,000

750,000

March

924,000

820,000

April

1,108,800

820,000

May

1,250,000

968,000

June

1,285,000

1,250,000

Notes:

Effective January 1, 2021 Springton's collection on sales will be as follows:

-70% collected in the month of sale

-The balance will be collected one month following sale

Required:

a)Do a sales budget for the handbags for the six months to June 2021,

showing quantity, unit price and total projected sales monthly.

b)Prepare the Cash collection schedule, with a total column, for the first

three months.

c)State two (2) advantages of budgeting.

Question 2 (CLO 3

The following information was obtained from KMG Manufacturing Company.

Standard Data:

Direct material4 yards @ $4 per yard

Direct labour3 hours @ $6 per hour

Variable manufacturing overheads $2 per hour

Actual Data:

Direct material48,000 yards @ $4.20 per yard

Direct labour34,000 hours @ $5.20 per hour

Variable manufacturing overhead34,000 hours totalling $80,000

Actual units produced18,000

Required:

a)Compute the direct material price variance

b)Calculate the direct material usage variance

c)Total Direct Material Cost variance

d)Calculate direct labour rate variance

e)Calculate direct labour efficiency variance

f)Total Direct Labour Costvariance

g)Variable Manufacturing Overhead Rate

h)Variable Manufacturing Overhead Efficiency

i)Give One (1) possible cause of an adverse material price variance.

Answer rating: 100% (QA)

Question 1 a Sales Budget for Handbags for the Six Months to June 2021 Month Quantity Unit Price Total Sales January 1500 1760 2640000 February 1575 1... View the full answer