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Budgeting Boyle Ltd manufactures two types of telephone 'Redline' and 'Blueline' - Leaving Cert Accounting - Question 9 - 2008
Question 9
Budgeting Boyle Ltd manufactures two types of telephone 'Redline' and 'Blueline'. The sales of each type of telephone and other relevant figures for the year ended ... show full transcript
Worked Solution & Example Answer:Budgeting Boyle Ltd manufactures two types of telephone 'Redline' and 'Blueline' - Leaving Cert Accounting - Question 9 - 2008
Step 1
Sales Budget in units and in £.
Answer
To prepare the Sales Budget:
-
Calculate the budgeted sales value for Redline:
- Budgeted quantity: 1,400 units
- Selling price per unit: £190
- Sales Value = Quantity × Selling Price = 1,400 × £190 = £266,000
-
Calculate the budgeted sales value for Blueline:
- Budgeted quantity: 900 units
- Selling price per unit: £280
- Sales Value = Quantity × Selling Price = 900 × £280 = £252,000
-
Compile the sales budget:
Type Budgeted Quantity Selling Price Budgeted Sales Value Redline 1,400 £190 £266,000 Blueline 900 £280 £252,000
Step 2
Production Budget.
Answer
To prepare the Production Budget:
-
Redline:
- Budgeted sales: 1,400
- Add budgeted closing stock: 275
- Less budgeted opening stock: 340
- Budgeted Production = Budgeted Sales + Closing Stock - Opening Stock = 1,400 + 275 - 340 = 1,335 units
-
Blueline:
- Budgeted sales: 900
- Add budgeted closing stock: 760
- Less budgeted opening stock: 160
- Budgeted Production = Budgeted Sales + Closing Stock - Opening Stock = 900 + 760 - 160 = 1,500 units.
Step 3
Materials Usage Budget.
Answer
To determine the Materials Usage Budget:
-
Redline:
- Production in units: 1,335
- Material X requirement: 15 grams/unit → Total = 1,335 × 15 = 20,025 grams
- Material Y requirement: 11 grams/unit → Total = 1,335 × 11 = 14,685 grams
-
Blueline:
- Production in units: 810
- Material X requirement: 14 grams/unit → Total = 810 × 14 = 11,340 grams
- Material Y requirement: 14 grams/unit → Total = 810 × 14 = 11,340 grams.
Step 4
Materials Purchases Budget in units and in £.
Answer
To determine the Material Purchases Budget:
-
Redline:
- Budgeted Material Usage in grams for Material X: 20,025
- Add Budgeted Closing stock: 370
- Less Budgeted Opening stock: 290
- Total material need = 20,025 + 370 - 290 = 20,105 grams
- Purchase price per gram = £1
- Cost = 20,105 × £1 = £20,105
-
Blueline:
- Budgeted Material Usage in grams for Material X: 11,340
- Add Budgeted Closing stock: 360
- Less Budgeted Opening stock: 410
- Total material need = 11,340 + 360 - 410 = 11,290 grams
- Purchase price per gram = £1
- Cost = 11,290 × £1 = £11,290.
Step 5
Labour Budget.
Answer
To compute the Labour Budget:
-
Redline:
- Labour requirements: 1,335 units × 5 hours = 6,675 hours
- Labour Cost = 6,675 hours × £12/hour = £80,100
-
Blueline:
- Labour requirements: 810 units × 8 hours = 6,480 hours
- Labour Cost = 6,480 hours × £12/hour = £77,760
-
Total Labour Budget = £80,100 + £77,760 = £157,860.