Preparing and Using Budgets Test One
Q11 of 15

The following information is available about a company that makes a single product.

• Each unit is made from 1.2 kg of material costing £5.00 per kg.
• It takes 9 minutes to make each item.
• 1,100 hours of basic labour time is available in the month of May. Any extra hours must be worked in overtime.
• The basic labour rate is £14 per hour. Overtime is paid at time and a half (50% more than basic rate).
• Variable overhead relates to labour hours worked, including overtime.
• Fixed overhead costs are incurred evenly through the year.

Complete the following table with the May budget figures.

	Budget for the year	Budget for May
Units sold	103,000	8,500
Units produced	100,000	8,000
	£	£
Sales	1,236,000
Cost of production:
Materials used	600,000
Labour	215,000
Variable production overhead	20,000
Fixed production overhead	42,000