Assignment: Computer Lab Exercise
Charcoal Best Ltd produces barbecues for domestic use. The manager in charge of production has been asked to prepare a production budget, a direct materials budget and direct labour budget for part of 2014 based on the company's sales forecast.
The materials and labour requirements per barbecue are:
Quantity Cost
Sheet metal 3 square meter $24 per square metre
Enamel paint 1 litre $12 per litre
Cutting and welding labour 3 hours $16 per hour
Finishing labour 1 hour $12 per hour
The business requires a finished goods ending inventory for each quarter that equals 20% of expected sales for the next quarter. Also, the ending inventory balance of direct materials should equal 25% of the next quarter's production requirements. The inventory balances on 1 January 2014 are forecast as:
Sheet metal 6,200 square metres
Enamel paint 1,200 litres
Barbecues 240 units
The forecast quarterly sales in units are:
First quarter 2014 12,400
Second quarter 2014 6,200
Third quarter 2014 8,800
Fourth quarter 2014 14,200
Using Microsoft Excel you are required to:
A. Prepare a quarterly production budget, in units only, for the first three quarters of 2014
B. Prepare a direct materials budget for the first two quarters of 2014 in both units and dollars.
C. Prepare a direct labour budget for the first two quarters of 2014.