At the end of September 2016, there were 880 units of a product manufactured by Robinson and Sons Limited. The company has a budgeted capacity of 7,000 units and during the month, one unit of the product was sold for $1,500. Production and sales for the month amounted to 6,500 units and 5,800 units respectively. Administrative, selling and production overheads were estimated at $820,000, $780,000 and $910,000 respectively. The following information relating to the product was also extracted from the financial records: Cost per unit Details $ Direct materials 250 Direct labour 275 Variable overheads 2 45 Total 770 Required: Determine the amount of stock in store at the start of the month. Calculate the full cost per unit of production for September 2016. Prepare profit statement for the month using Marginal Costing. Determine the contribution to sales ratio. Find the break-even point in units and sales revenue.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
At the end of September 2016, there were 880 units of a product manufactured by Robinson and Sons Limited. The company has a budgeted capacity of 7,000 units and during the month, one unit of the product was sold for $1,500. Production and sales for the month amounted to 6,500 units and 5,800 units respectively. Administrative, selling and production
Cost per unit
|
Details |
$ |
|
Direct materials |
250 |
|
Direct labour |
275 |
|
Variable overheads |
2 45 |
|
Total |
770 |
Required:
- Determine the amount of stock in store at the start of the month.
- Calculate the full cost per unit of production for September 2016.
- Prepare profit statement for the month using Marginal Costing.
- Determine the contribution to sales ratio.
Find the break-even point in units and sales revenue.
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