Smart Gear Ltd has been in business for many years supplying Tablet screens to wholesalers. The production for the year 2023 is currently being planned and the following is an extract from the sales budget for the "10 inch" screens: Period Unit (Screen) 1 23,000 2 25,000 3 27,000 4 22,000 5 20,000 The inventory (stock) of screens at the start of each month is to be equal to 20% of the sales estimate for the month. However, the company is planning to have 6,000 screens in stock at the start of period 1. There is no work-in-progress at the end of any period. The Tablet screens would need a special type of plastic and it takes 4 kg of plastic to make 8 screens. Each 40 kilogrammes (kg) of plastic are forecast to cost £200. An amount of plastic equal to 25% of each period's usage is required to be in stock at the start of each month. However, the stock at the start of period 1 will be 550 kg of plastic. Required For the first 3 periods, prepare: a) The production budget (in number of screens produced); b) The materials usage cost budget; c) The materials purchase cost budget.
Smart Gear Ltd has been in business for many years supplying Tablet screens to wholesalers. The production for the year 2023 is currently being planned and the following is an extract from the sales budget for the "10 inch" screens: Period Unit (Screen) 1 23,000 2 25,000 3 27,000 4 22,000 5 20,000 The inventory (stock) of screens at the start of each month is to be equal to 20% of the sales estimate for the month. However, the company is planning to have 6,000 screens in stock at the start of period 1. There is no work-in-progress at the end of any period. The Tablet screens would need a special type of plastic and it takes 4 kg of plastic to make 8 screens. Each 40 kilogrammes (kg) of plastic are forecast to cost £200. An amount of plastic equal to 25% of each period's usage is required to be in stock at the start of each month. However, the stock at the start of period 1 will be 550 kg of plastic. Required For the first 3 periods, prepare: a) The production budget (in number of screens produced); b) The materials usage cost budget; c) The materials purchase cost budget.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Question 3
Smart Gear Ltd has been in business for many years supplying Tablet
screens to wholesalers. The production for the year 2023 is currently
being planned and the following is an extract from the sales budget
for the "10 inch" screens:
Period Unit (Screen)
1
23,000
2
25,000
3
27,000
4
22,000
5
20,000
The inventory (stock) of screens at the start of each month is to be
equal to 20% of the sales estimate for the month. However, the
company is planning to have 6,000 screens in stock at the start of
period 1. There is no work-in-progress at the end of any period.
The Tablet screens would need a special type of plastic and it takes
4 kg of plastic to make 8 screens. Each 40 kilogrammes (kg) of
plastic are forecast to cost £200.
An amount of plastic equal to 25% of each period's usage is
required to be in stock at the start of each month. However, the
stock at the start of period 1 will be 550 kg of plastic.
Required
For the first 3 periods, prepare:
a) The production budget (in number of screens produced);
b) The materials usage cost budget;
c) The materials purchase cost budget.
d) The top management of Smart Gear Ltd has been recently
concerned about the absence of motivation among employees to
achieve the targets set in the budget. Provide some suggestions
on how the management team can enhance employee motivation
and satisfaction.
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