Q.1 The budget department of ABC Ltd., gathered the following information for preparing its budgets for...

Q.1 The budget department of ABC Ltd., gathered the following information for preparing its budgets for forthcoming period. 1. Sales forecast. Product Sales Quantity Selling price Inventories 01-01-2019 31-12-2019 Product-A 30,000 units Rs. 30 per unit. 5,000 units 10,000 units Product-B 40,000 units Rs. 40 per unit. 10,000 units 15,000 units Materials Purchase budget. 2. Material Product Inventories A B 01-01-2019 31-12-2019 Price per kg Materials-X 2kg 1kg 25,000kg 30,000kg Rs.2.0 Materials-Y 1kg 3kg 10,000 kg 15,000 kg Rs.1.0 3. Labor budget. Hour per unit Rate per hour Product –A 2 hours Rs 5 per hour Product-B 3 hours Rs. 4 per hour 1/4 4. Factory Overhead Factory overhead rate is Rs.2 per direct labor hour. Required:- (Marks-08) a. Prepare Sales budget product wise and total. b. Production budget in quantity product wise and total. c. Purchase budget in quantity and Rupees. d. Labor cost budget Rupees. e. Factory overhead budget Rupees. f. Manufacturing cost per unit of product-A, B and C. g. Discuss the behavioral issues that you may face while implementing budgeting in Pakistani environment. (Marks-02)

Expert Solution

Hello,

I have solved this question by using budgeting concept, budgets are prepared as per requirements of the question. Sales budget prepared by multiplying sales price with quantity sold, the production budget is prepared by doing inventory adjustments. The purchase budget of material prepare by calculating material consumed by product A and B.

Any doubts in solution are welcome

ekkarill92 answered 2 years ago

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