Rahapuka Ltd is a manufacturing company which manufacturers and assembles car components. The following budgeted information relates to Rahapuka Ltd for the forth coming period. Products A1 B2 C3 '000 '000 '000 Sales and production (units) 50 40 30 N$ N$ N$ Selling price (per unit) 45 95 73 Prime costs (per unit) 32 84 65 Hours Hours Hours Machine department (machine hours per unit) 2 5 4 Assembly department (direct labour hours per unit) 7 3 2 Overheads can be re-analysed into 'cost pools' as follows; cost pool N$ '000 Cost driver Quantity for the period Machining services 357 Machine hours 420.000 Assembly services 318 Direct labour hours 530.000 Set up costs 26 Set ups 520 Order processing 158 Customer orders 32.000 Purchasing 84 Suppliers' orders 11.200 You have also been provided with the following estimates for the period A1 B2 C3 Number of set ups 120 200 200 Customer orders 8000 8000 16000 Suppliers' orders 3000 4000 4200 Prepare and present a profit statement showing the TOTAL profit or loss for each of the THREE products using activity-based costing.
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.
Rahapuka Ltd is a manufacturing company which manufacturers and assembles car components. The following budgeted information relates to Rahapuka Ltd for the forth coming period.
Products
| A1 | B2 | C3 | |
| '000 | '000 | '000 | |
| Sales and production (units) | 50 | 40 | 30 |
| N$ | N$ | N$ | |
| Selling price (per unit) | 45 | 95 | 73 |
| Prime costs (per unit) | 32 | 84 | 65 |
| Hours | Hours | Hours | |
| Machine department (machine hours per unit) | 2 | 5 | 4 |
| Assembly department (direct labour hours per unit) | 7 | 3 | 2 |
Overheads can be re-analysed into 'cost pools' as follows;
| cost pool | N$ '000 | Cost driver | Quantity for the period |
| Machining services | 357 | Machine hours | 420.000 |
| Assembly services | 318 | Direct labour hours | 530.000 |
| Set up costs | 26 | Set ups | 520 |
| Order processing | 158 | Customer orders | 32.000 |
| Purchasing | 84 | Suppliers' orders | 11.200 |
You have also been provided with the following estimates for the period
| A1 | B2 | C3 | |
| Number of set ups | 120 | 200 | 200 |
| Customer orders | 8000 | 8000 | 16000 |
| Suppliers' orders | 3000 | 4000 | 4200 |
Prepare and present a profit statement showing the TOTAL profit or loss for each of the THREE
products using activity-based costing.
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