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In: Accounting

Accounting: At the end of 2019, BETA Ltd, in order to compile the 2020 budget, gives...

Accounting:

At the end of 2019, BETA Ltd, in order to compile the 2020 budget, gives the following info: - Product P1: Stock (in units) 31/12/2019: 7.000 - Product P2: Stock (in units) 31/12/2019 9.000 Company predicts to sell 20.000 EUR of P1 with price EUR 10 and EUR 25.000 of P2 with price EUR 12. Also, the final stock of P1 is expected to be 30% of its sales in units and the final stock of P2 20% of its sales in units. Concerning raw materials, the stock in units on 31/12/2019 is for Material M1 8.000 in units and for Material M2 12.000 in units. Also final stock for M1 is expected to be 10% of its use and for M2 20% of its use. Finally, note that for the production of P1 , 1 M1 and 3 M2 are needed and for the production of P2, 4M1 and 2 M2 are needed. The following are needed: a. The production in units for P1 and P2. b. Assuming that raw material M1 is bought EUR 4 per kilo and raw material M2 EUR 2 per kilo, find the cost of the required purchases of M1 and M2. c. Assuming that the cost of raw material M1 is EUR 4 per kilo and the cost of raw material M2 EUR 3 per kilo, direct labour 70.000, cost of electricity at head office 30.000, indirect materials 45.000 and the rest various factory costs 95.000 , find the direct (first ) cost of the company.

Solutions

Expert Solution

Following is the calculation of requirement of (a),(b),(c).

Note labor cost is not clear that it is related per unit or total cost so it is assumed to be total labor cost and direct cost of the company is calculated in that way it is not bifurcated into 2product it is calculated directly as the per unit of labor was not available and it is not clear that labor cost is the total cost for both the products.

You can ask if you dont understand anythin.

(a) productions in units are calculated as follows.

How the calculations are done is as follows.

(b)First we need to calculate the raw material requirement per unit of finished goods and then the total requirement of the total finished goods.

How the calculations are done is as follows.

(c) the only direct cost will be included no indirect cost even factory costs are an indirect cost, electricity for head office is not a direct cost.

How the calculations are done is as follows.

ekkarill92 answered 11 hours ago
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