Question 1 A manufacturing company, VMTC PLC, makes the product, blitz. Monthly sales for the first five months of 2022 have been estimated as: Month Units January 210 000 February 180 000 March 210 000 April 220 000 May 200 000 Additional Information: i. Actual units sold in 2021 November and December were 190 000 and 220 000, respectively. ii. One unit of blitz requires 2 kg of material at $3.50 per kg. iii. One unit of blitz requires half an hour of direct labour at a rate of $12 per hour. iv. Based on past experience, 60% of cash is received in the month of sale, 25% the following month, 10% two months after and 5% is usually irrecoverable. V. Selling price is $18 per unit. vi. The company intends to have finished stock at the end of each month equivalent to 15% of the following month's budgeted sales. The policy regarding stock of raw materials is to have 25% of the following month's production requirements. vii. Stocks at 2022 January 01 are estimated to be 22 000 units of finished goods and 104 000 kg of raw materials. Produce, for 2022 January, February and March: A. production budget in units. (3 marks) B. raw materials purchased budget. (7 marks) C. a direct labour budget. (3 marks) D. a cash collection schedule for sales. (7 marks)
Question 1 A manufacturing company, VMTC PLC, makes the product, blitz. Monthly sales for the first five months of 2022 have been estimated as: Month Units January 210 000 February 180 000 March 210 000 April 220 000 May 200 000 Additional Information: i. Actual units sold in 2021 November and December were 190 000 and 220 000, respectively. ii. One unit of blitz requires 2 kg of material at $3.50 per kg. iii. One unit of blitz requires half an hour of direct labour at a rate of $12 per hour. iv. Based on past experience, 60% of cash is received in the month of sale, 25% the following month, 10% two months after and 5% is usually irrecoverable. V. Selling price is $18 per unit. vi. The company intends to have finished stock at the end of each month equivalent to 15% of the following month's budgeted sales. The policy regarding stock of raw materials is to have 25% of the following month's production requirements. vii. Stocks at 2022 January 01 are estimated to be 22 000 units of finished goods and 104 000 kg of raw materials. Produce, for 2022 January, February and March: A. production budget in units. (3 marks) B. raw materials purchased budget. (7 marks) C. a direct labour budget. (3 marks) D. a cash collection schedule for sales. (7 marks)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...
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Transcribed Image Text:Question 1
A manufacturing company, VMTC PLC, makes the product, blitz. Monthly sales for
the first five months of 2022 have been estimated as:
Month
Units
January
210 000
February
180 000
March
210 000
April
220 000
May
200 000
Additional Information:
i.
Actual units sold in 2021 November and December were 190 000 and 220 000,
respectively.
ii.
One unit of blitz requires 2 kg of material at $3.50 per kg.
iii.
One unit of blitz requires half an hour of direct labour at a rate of $12 per hour.
iv.
Based on past experience, 60% of cash is received in the month of sale, 25% the
following month, 10% two months after and 5% is usually irrecoverable.
V.
Selling price is $18 per unit.
vi.
The company intends to have finished stock at the end of each month equivalent to
15% of the following month's budgeted sales. The policy regarding stock of raw
materials is to have 25% of the following month's production requirements.
vii.
Stocks at 2022 January 01 are estimated to be 22 000 units of finished goods and 104
000 kg of raw materials.
Produce, for 2022 January, February and March:
A. production budget in units.
(3 marks)
B.
raw materials purchased budget.
(7 marks)
C.
a direct labour budget.
(3 marks)
D.
a cash collection schedule for sales.
(7 marks)
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