A. Given that total budgeted overheads = Shs.240,000
Production budget is as follows:
|
Product
|
A
|
B
|
|
i)
|
Units
|
20,000
|
10,000
|
|
ii)
|
Labour hours
|
20,000
|
20,000
|
|
iii)
|
Labour cost
|
17,500
|
22,500
|
|
iv)
|
Machine hours
|
45,000
|
15,000
|
|
v)
|
Material cost
|
15,000
|
25,000
|
Required: The overhead absorption rater per unit of A and B using the following methods:
a) Unit method
b) Percentage on material cost.
c) Percentage on labour cost.
d) Percentage On prime cost.
e) Labour hour rate.
f) Machine hour rate.
A. Use the following information to prepare income statements using absorption costing and marginal costing.
Kshs.
Direct Material cost per unit 5
Direct labour cost per unit 9
Variable manufacturing overhead per unit. 0.60
Total fixed manufacturing overhead per year 96000
Number of units produced per year 10000
Sale price per unit 35
Units sold 8000
Variable selling and administration expenses per unit 1.20
Fixed administration and selling expenses 58000
Explain the difference in profits calculated in above.
B. Kwetu enterprises sell two products X and Y. During the year 2015, it plans to sell the following quantities of each product.
Sales budget (in units)
Total Quarter 1 Quarter 2 Quarter 3 Quarter 4
X 7000 9000 2300 3000 8000
Y 3000 8500 7500 5500 8500
Each of these two products is sold on a seasonal basis. Product A tends to sell better in summer months, while product B sells better during winter. X is sold at sh.10 per unit while Y at a price of sh.20 per unit throughout the year.
A study of the past experience reveals that KituKidogo enterprises has lost about 3% of its invoice each year because of returns (constituting 2% loss of revenue) allowances and bad debts
Required:
I. Prepare a sales budget incorporating the above information.