Preparation of the annual budget: manufacturer 1 Sales budget: Box C Box P – My Assignment Tutor

Lecture example: Preparation of the annual budget: manufacturer 1 Sales budget: Box C Box P Total Sales (in units) Sales price per unit Sales revenue 2 Production budget (in units):  Box C   Box P Sales Add Desired ending inventory Total units needed Deduct Beginning Inventory Production requirements 3 Direct material budget: Corrugating medium Box C Box P Total Production requirements (number of boxes) Raw material required per box (kgs) Raw material required for production (kgs) Add Desired ending raw-material inventory Total raw material required Deduct Beginning raw-material inventory Raw material to be purchased Price (per kilogram) Cost of purchases (corrugating medium) Paperboard Box C Box P Total Production requirement (number of boxes) Raw material required per box (kgs) Raw material required for production (kgs) Add Desired ending raw-material inventory Total raw-material required Deduct Beginning raw-material inventory Raw material to be purchased Price (per kilogram) Cost of purchases (paperboard) Total cost of raw-material purchases (corrugating medium+ paperboard) 4 Direct labour budget: Box C Box P Total Production requirements (number of boxes) Direct labour required per box (hrs) Direct labour required for production (hrs) Direct labour rate Total direct labour cost 5 Manufacturing-overhead budget: Indirect material Indirect labour Utilities Land tax and council rates Insurance Depreciation Total overhead 6 Selling and administrative expense budget: Salaries of sales personnel Advertising Management salaries Clerical wages Miscellaneous administrative expenses Total selling and administrative expenses 7 Budgeted income statement: Sales revenue (from sales budget, see Requirement 1) Less Cost of goods sold: Box C: 500 000  $ Box P: 500 000  $ Gross margin Selling and administrative expenses Profit before taxes Income tax expense (40%) Net profit * Calculation of manufacturing cost per unit: Predetermined overhead rate = = = Unit cost for Box C = direct materials + direct labour + manuf. overhead = = Unit cost for Box P = direct materials + direct labour + manuf. overhead = =