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(appendix) Sales, production and purchases budgets; activity-based overhead; manufacturer

George Ltd manufactures and sells two different types of colls used in electric motors, in September, Jessica

Martin, the management accountant, compiled the following data for the upcoming annual budget.

Use of direct material;

Amount used per unit

Direct material

Sheet metal

Copper wire

Platform

2 kilograms

Heavy coll

5 kilogrim

3 kilograms

1 unit

Row material prices and inventory levels:

Raw material

Sheet metal

Anticipated purchase

Expected inventorles

price

1 January

$8

32 000 kilograms

Desired inventories 31

December

36 000 kilogrums

Copper wire

Platform

$S

$3

29 000 kilograms

6 000 units

32 000 kilograms

7 000 unite

Direct labour requirements and rates:

Product

Hours per unit

2

Rate per hour

Light coil

Heavy coil

$30

$40

Manufacturing overhead:

Activity

Material handling:

Cost per unit of activity driver

Sheet metal and copper wire

Platforms

Machine related

Shipping

General manufacturing overhead

$0,50 per kg of raw material purchased

$0,10 per unit purchased

$1.50 per machine hour*

$2.00 per coil shipped

$1.20 per direct labour hour

* Total annual machine hours are 100 000 for light colls and 200 000 for heavy colls,

Finished goods inventories (in units):

Product

Light coil

Heavy coil

Expected 1 January

Desired 31 December

20 000

25 000

8 000

9 000

Sales forecast:

Product

Light coil

Heavy coil

Units

60 000

40 000

Price

$130

$190

11

Required:

Prepare the following budgets;

1. sales budget (in dollars)

2. production budget (in units)

3. direct material purchases budget (in quantities)

4. direct material purchases budget (in dollars)

5. direct labour budget (in dollars)

6. manufacturing overhead budget (in dollars).

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