Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparing their budgets for the next financial year ending 30 June 2022. They have prepared the following sales budget: Quarter 1 2 3 4 (July – Sept 21). (Oct - Dec 21) (Jan - March 22) (April – June 22) Sales (units) Selling price per unit 26,500 22,000 20,000 28,500 €95 €95 €95 €95 All sales are on a cash basis. Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closing inventory of finished goods of 25% of the next quarters sales demand. Sales Demand in Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparing
their budgets for the next financial year ending 30 June 2022. They have prepared the
following sales budget:
Quarter
1
2
3
4
(July – Sept 21)
(Oct – Dec 21)
(Jan – March 22)
(April – June 22)
Sales (units)
Selling price
26,500
22,000
20,000
28,500
per unit
€95
€95
€95
€95
All sales are on a cash basis.
Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closing
inventory of finished goods of 25% of the next quarters sales demand. Sales Demand
in Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022.
Each unit of finished product requires 1.5m? of leather and 1m? of rubber. Leather
currently costs €25 per m? and rubber costs €10 per m?. As a result of Brexit, Run Ltd
have been informed that costs of raw materials are due to increase by 5% in Quarter
3.
You are informed that management require closing stock of raw materials equal to
15% of the following quarter's production at the end of each quarter.
Purchases are bought in month 3 of each quarter to ensure they have the required
stock. One half of the purchases are paid in the month of purchase, whilst the
remainder is paid one month after purchase. The creditors balance on the 1st July
2021 is €500,000.
Each unit manufactured requires 4.5 hours of direct labour. Employees are paid €10
per hour.
Run Limited will incur marketing and other expenditure of €10,000 per month and rent
and rates of €250,000 in the financial year to June 2022. The cash balance on the 1st
July 2021 is €75,000.
Transcribed Image Text:Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparing their budgets for the next financial year ending 30 June 2022. They have prepared the following sales budget: Quarter 1 2 3 4 (July – Sept 21) (Oct – Dec 21) (Jan – March 22) (April – June 22) Sales (units) Selling price 26,500 22,000 20,000 28,500 per unit €95 €95 €95 €95 All sales are on a cash basis. Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closing inventory of finished goods of 25% of the next quarters sales demand. Sales Demand in Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022. Each unit of finished product requires 1.5m? of leather and 1m? of rubber. Leather currently costs €25 per m? and rubber costs €10 per m?. As a result of Brexit, Run Ltd have been informed that costs of raw materials are due to increase by 5% in Quarter 3. You are informed that management require closing stock of raw materials equal to 15% of the following quarter's production at the end of each quarter. Purchases are bought in month 3 of each quarter to ensure they have the required stock. One half of the purchases are paid in the month of purchase, whilst the remainder is paid one month after purchase. The creditors balance on the 1st July 2021 is €500,000. Each unit manufactured requires 4.5 hours of direct labour. Employees are paid €10 per hour. Run Limited will incur marketing and other expenditure of €10,000 per month and rent and rates of €250,000 in the financial year to June 2022. The cash balance on the 1st July 2021 is €75,000.
Q 2 (d)
Confirm the accounts payable balance as at 30th June 2022.
Transcribed Image Text:Q 2 (d) Confirm the accounts payable balance as at 30th June 2022.
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