Preparing and Using Budgets Test One
Q9 of 15

(a) Complete the following working schedule for raw materials. Each unit produced requires 1.5 kg of material.
Closing inventory is valued at budgeted purchase price.

Raw Materials	kg	£
Opening inventory of raw materials	1400	3310
Purchases of raw materials	34600	89960
Sub total	36000	93270
Used in production
Closing inventory of raw materials

(b) Complete the following working schedule for direct labour. Each unit takes 6 minutes to make.
There are 12 direct labour employees, each working 180 basic hours in the month. Additional hours are paid at an overtime rate of time and a half.
The overtime premium is included in the direct labour cost.

Direct Labour	Hours	Cost £
Basic time at £15 per hour
Overtime
Total

(c) Complete the following working schedule for overheads. Variable overheads are recovered based on total labour hours worked.

Overheads	Hours	Cost £
Variable overheads at £10.00 per hour
Fixed overheads		44030
Total overheads

(d) Complete the following operating budget, using information from the earlier tasks. Closing inventory of finished goods is to be valued at budgeted production cost per unit.

Operating Budget	Units	£ per unit	£
Sales		10.00
Cost of Goods Sold:
Opening inventory of finished goods			16,600
Cost of production:		£
Raw Materials
Direct Labour
Production Overheads
Total cost of production
Closing inventory of finished goods
Cost of goods sold
Gross profit
Non-production overheads		£
Administration		11,000
Marketing		10,500
Total non-production overheads
Net profit