Omega Budget Example Solution

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Omega Document Case Company
Budget Example- text distributed in class- to be covered during the first week.

1. Sales Budget y/e 31 Dec 2003 number of cases soldselling price per case ₤Sales Revenue ₤ Delta 4.00060240.000
Alpha2.50055137.500
377.500
2. Production Budget y/e 31 Dec 2003number of cases
DeltaAlpha
Planned Sales4.0002.500
Desired ending finished goods inv.1.100500
total required5.1003.000
(less) beginning finished goods inv.1001.000
budgeted production (cases)5.0002.000

3.Direct Material Usage Budget y/e 31 Dec 2003
Material Content Delta ProductionUsageMaterial Content Alpha Productionusage
units/casecasesunitsunits/casecases
Leather25.00010.00042.0008000
Zips15.0005.00022.0004000

4.Direct material puchases budget y/e 31 Dec 2003
LeatherZips
desired ending inv of raw matl's 8.0002.000
units needed for production18.0009.000
total required26.00011.000
(less) beginning inv6.0001.000
purchase20.00010.000
cost per unit ₤31
Budgeted purchase costs ₤60.00010.00070.000purchase of DM

5. Direct Labor Budget y/e 31 Dec 2003
Labor hr/casecases total labor hoursrate per hr ₤total labor cost ₤ Cutting Dept
Delta2,05.00010.000660.000
Alpha1,52.0003.000618.000
Stitching Dept
Delta1,005.0005.000735.000
Alpha0,502.0001.0007,07.000
120.000

6.Production Overheads budget y/e 31 Dec 2003
Cutting Dept (expected 13,000 DLH)Stitching Dept (expected 6000 DLH)
Fixed Cost ₤Var. Cost ₤Fixed Cost ₤Var. Cost ₤ Indirect Labor7.0003.000
Indirect Material3.000 9.000,00
Maintenance2.0001.000500 500,00
Business rates6.0001.000
Depreciation8.0002.000
Electricity1.0002.000500 1.000,00
Budgeted overhead costs24.0006.0007.000 10.500,00 47.500 Overhead absorption rate per DLH ₤1,850,461,171,75
DLH: direct labor hour2,312,92

7. Standard Budgeted unit cost of manufacturing y/e 31 Dec 2003
DeltaAlpha
input unit costunits in productcost units in productcost

Leather3,002,006,004,0012,00
Zips1,001,001,002,002,00
Direct Labor
Cutting6,002,0012,001,509,00
Stitching7,001,007,000,503,50

Production Overhead
Cutting - Fixed1,852,003,691,502,77
- Variable0,462,000,921,500,69
Stitching - Fixed1,171,001,170,500,58
- Variable1,751,001,750,500,88
Standard cost of product ₤ / per unit of product33,5331,42

8. Closing stock budget at 31 Dec 2003unitsunit cost total cost

Direct Materials
Leather 8.000324.000
Zips2.00012.00026.000
Finished products
Delta1.10033,5336.885
Alpha50031,4215.71052.595

Budgeted closing stock i.e. inventory78.595

9. Cost of Sales Budget y/e 31 Dec 2003
Direct Material usage (3)63.000
Direct Labor (5)120.000
Production Overhead (6)47.500230.500
add: opening stock finished products40.000270.500
less:closing stock finished products52.595
Cost of Sales217.905

10. Marketing and administration expenses budget y/e 31 Dec 2003

Marketing Expenses:
Salaries28.000
Advertising24.000
Other2.00054.000
Administrative Expenses:
Salaries32.000
Bank Interest5.000
Other4.15041.150
Budgeted Selling and Admin Exp95.150

11. Budgeted profit statement y/e 31 dec 2003

sales (1)377.500
less; Cost of Sales (9)217.905
Gross Profit159.595
Less: marketing and admin.expenses (10)95.150
less:...
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