A company produces two (2) products, “ore” and “tin”. The following sales forecast for both products was decided on for the financial year January 1, 2015 to December 31, 2015: Details Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Ore 5,000 6,500 7,000 5,500 24,000 Tin 3,900 4,300 5,000 4,700 17,900 Notes: The company planned to sell one unit of Ore for $600 and one unit of tin for $500 during 2015. The sales forecast for the first quarter of 2016 is 6,000 units of ore and 4,500 units of tin. The closing stock level for both products at the end of each quarter is to be held at a level equal to fifteen percent (15%) of the budgeted sales for the next quarter. At the start of 2015 there were in stock 450 units of ore and 600 units of tin. To make one unit of ore three (3) units of raw material ZB are required, while four (4) units of raw material AX are required to make one unit of tin. The cost of raw material ZB Is $70 per unit, while the cost of raw material AX is $60 per unit. Closing raw material stocks in units in store at the end of each quarter is to be equivalent to twenty percent (20%) of the forecasted sales for the following quarter. At the start of 2015 there were 1,500 units of raw material ZB and 2,400 units of raw material AX in store. Required: The sales budget for both products for 2015. The production budget for both products for 2015.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company produces two (2) products, “ore” and “tin”. The following sales forecast for both products was decided on for the financial year January 1, 2015 to December 31, 2015:

Details	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Ore	5,000	6,500	7,000	5,500	24,000
Tin	3,900	4,300	5,000	4,700	17,900

Notes:

The company planned to sell one unit of Ore for $600 and one unit of tin for $500 during 2015.
The sales forecast for the first quarter of 2016 is 6,000 units of ore and 4,500 units of tin.
The closing stock level for both products at the end of each quarter is to be held at a level equal to fifteen percent (15%) of the budgeted sales for the next quarter.
At the start of 2015 there were in stock 450 units of ore and 600 units of tin.
To make one unit of ore three (3) units of raw material ZB are required, while four (4) units of raw material AX are required to make one unit of tin.
The cost of raw material ZB Is $70 per unit, while the cost of raw material AX is $60 per unit.
Closing raw material stocks in units in store at the end of each quarter is to be equivalent to twenty percent (20%) of the forecasted sales for the following quarter. At the start of 2015 there were 1,500 units of raw material ZB and 2,400 units of raw material AX in store.

Required:

The sales budget for both products for 2015.

The production budget for both products for 2015.

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