Question

creating a master budget

purchase prices are forecast for direct materials:

	Tea	Lemonade
Syrup	$1200 per lot	$1100 per lot
Containers	$1000 per lot	$1000 per lot
Packaging	$800 per lot	$800 per lot

Summary data used in developing budgets for 2017 are as follows:
Sales:
a. Tea, 1080 lots at $9,000 selling price per lot.
b. lemonade, 540 lots at $8,500 selling price per lot.

Opening stock of direct materials:

a. Syrup for tea, 80 lots at $1,100 purchase price per lot.
b. Syrup for lemonade, 70 lots at $1,000 purchase price per lot.
c. Containers, 200 lots at $950 purchase price per lot.
d. Packaging, 400 lots at $900 purchase price per lot.
Opening (1 January 2017) stock of finished goods:
a. Tea, 100 lots at $5,300 per lot.
b. lemonade, 50 lots at $5,200 per lot.
Target closing (31 December 2017) stock of direct materials:
a. Syrup for tea, 30 lots.
b. Syrup for lemonade, 20 lots.
c. Containers, 100 lots.
d. Packaging, 200 lots.
Target closing (31 December 2017) stock of finished goods:
a. tea, 20 lots.
b. lemonade, 10 lots.
Each lot requires 20 direct manufacturing labor hours at the 2017 budgeted rate of $25
per hour. Indirect manufacturing labor costs are included in the manufacturing
overhead forecast.
Variable manufacturing overhead is forecast to be $600 per hour of bottling time;
bottling time is the time the filling equipment is in operation. It takes 2 hours to bottle
one lot of tea and 2 hours to bottle one lot of lemonade. Fixed
manufacturing overhead is forecast to be $1,200,000 for 2017.
Hours of budgeted bottling time is the sole allocation base for all fixed manufacturing
overhead.
Administration costs are forecast to be 10% of the cost of goods manufactured for 2017.
Marketing costs are forecast to be 12% of sales for 2017. Distribution costs are forecast
to be 8% of sales for 2017.
Required:
Using the first-in, first-out (FIFO) method for costing all stock. Prepare the following budgets for 2017:
1. Revenue Budget (in $)
2. Production Budget (in units)
3. Direct materials usage budget (in units and $)
4. Direct materials purchases budget (in units and $)
5. Direct manufacturing labor budget
6. Manufacturing overhead costs budget
7. Closing finished goods stock budget
8. Cost of goods sold budget
9. Marketing costs budget
10. Distribution costs budget
11. Administration costs budget
12. Budgeted Profit and loss account (Income
Statement)

Answer 1