Section -A

Question -1
Question -2
Section -B
Question -3
 Question -4
Ans 1: Sales Budget

Q2 Q3

Budgeted Sales Units 3000 4500

Selling Price 200 200

Sales Budget        600,000        900,000

Ans 2: Production Budget

Q2 Q3

Budgeted Sales Unit 3000 4500

Add: Expected Closing Units 1500 1200

Total Production 4500 5700

Less : Opening Stock 600 1500

Production Budget (units) 3900 4200

Closing Stock (1/3 of next quarter sales)

Q2: (4500*1/3= 1500 units)

Q3: (3600*1/3= 1200 units)

Ans 3: Material Usage Budget

Q2 Q3

Total Production Budget 3900 4200

Raw Material required per unit 4 kg 4 kg

Total Raw material required for production(in kgs) 15600 16800

Add: Closing Raw Material Required(in kgs) 6750 4500

Total Raw Material Required 22350 21300

Less: Opening Raw Material Required 5000 6750

 Raw Material Budget (In Kgs) 17350 14550
Ans 4: Material Purchase Budget

Q2 Q3

Raw Material Budget (In Kgs) 17350 14550

Rate per Kg 20 20

Raw Material Purchase Budget        347,000        291,000

Ans 5: Direct Labour Budget

Q2 Q3

Production Budget (units) (A) 3900 4200

Direct labour required for production of each unit 24 min 24 min

Direct Labour Required (in hour)(B) 0.4 0.4

Direct Labour hour required for Production units(C=A*B) 1560 1680

Direct Labour Hour Rate (D) R40 R40

Total Direct Labour Budget (C*D)           62,400           67,200

 Section -C
Question -5
5.1: Statement showing gross profit under absorption costing:

Sales                 (250 units * 800)                      200000

Less:Cost of goods sold:

Direct material     (21037.5+22000)        43037.5

Direct labour                                        27300

Fixed manufacturing overheads              14300

Cost of goods sold                                              84637.5

Gross profit                                                         115362.5

5.2 Flexible Budget for 250 units:

Budgeted production and sales                   250 units

Budgeted selling price                                 837.5

Budgeted sales                                           209375

Cost of goods sold:

Direct material   A (250*75)                           18750

Direct material B     (250*90)                            22500

Direct labour            (250*110)                          27500

Fixed overheads       (250*60)                           15000

Total cost of goods sold                                    83750

Budgeted Gross profit                                       125625

5.3 Calculate the following variances and indicate whether they are favorable or unfavorable.