Question

In: Accounting

Question 1.Obaapa Fashions Ltd has budgeted to sell 100,000 pieces of face masks for April 2020....

Question 1.Obaapa Fashions Ltd has budgeted to sell 100,000 pieces of face masks for April 2020. At the end of March 2020, the company had 20,000 pieces of face mask in inventory and would like to have an inventory of 30,000 pieces of face masks at the end of April. Each piece of face mask requires 2 square meters of treated fabric, the primary raw material. Inventory of the treated fabric at the beginning of April is 5,000 square meters. It is expected that each square meter of the treated fabric will cost GHS3. Assuming the sales budget is met, and the desired ending inventory of the face mask is achieved, how many square meters of the treated fabric need to be purchased in April 2020, in order to have an ending inventory of 8,000 square meters of the treated fabric? What will be the cost of purchases for April 2020? (show all workings clearly).

Question 2.

Ewuarbena & Co Manufacturing Ltd have budgeted to sell these quantities of its products, Chocomix, for the coming months in 2020: January – 160,000 sachets; February – 240,000 sachets; March – 200,000 sachets; April – 400,000 sachets; and May – 150,000 sachets. The company expects to sell each sachet for GHS20. The company has decided that to avoid losing customers arising from production hold-ups it would like to maintain a finished goods inventory in the future equal to one-fifth of the following month's budgeted sales. At the beginning of January 2020, the company had finished goods inventory of 10,000 sachets. What is total budgeted sales and production for the 2020 1st quarter ended (January – March 2020)? (show all workings clearly)

Solutions

Expert Solution

Req 1.
Production units of April
Sales units 1,00,000
Add: Ending inventory 30,000
Total 1,10,000
Less: Beginning inventory 20,000
Production units of April 90,000
Purhase budget:
Production units 90,000
Multiply: RM required per unt 2
Total Production requirement 1,80,000
Add: Ending inventory of RM 8,000
Sub total 1,88,000
Less: Beginning inventory of RM 5,000
Purchase units 1,83,000
Multiply: Cost per unit 3
Budgeted purchase in amount 549000
Req 2.
Sales Budget
Jan Feb March Q-1
Sales units 160000 240000 200000 600000
Multiply: Selling price 20 20 20 20
Budgetd sales amount 3200000 4800000 4000000 12000000
Production Budget
Jan Feb March Q-1 April
Budgetd sales units 160000 240000 200000 6,00,000 4,00,000
Add: Ending inventory 48000 40000 80000 80000
Total 208000 280000 280000 680000
Less: Beginning inventory 10000 48000 40000 10000
Budgetd production units 198000 232000 240000 670000

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