MANCO QUESTION 3 BUDGETS BEST OIL fills and sells 5L contain

MANCO QUESTION 3 BUDGETS BEST OIL fills and sells 5L containers of cooking oil at a price of R50 per The following information has been supplied by their management INFORMATION A. T he management has budgeted the following sales volume for their 5L cooking oil for 2018. October September July August 8 000 Projected sales of SL cooking oil 12 000 14 000 10 000 Managements policy is to maintain the closing inventory each month at a level of 20% of the followi month\'s budgeted sales. B. C. The production department has supplied the following additional information: June to August 2018 costs: -Plastic 5L containers cost R7 per bottle. - Direct labour costs R2 per 5L oil. Manufacturing overheads costs R4 per 5L oil. September 2018 cost expectations: -Direct la bour cost will increase by 50% per 5L bottle. . Manufacturing overhead costs will decrease by R1 per 5L oil. REQUIRED 3.1 Prepare the Sales Budget for July, August and September 2018 3.2 Prepare the Unit Production Budget for July, August and September 2018. 3.3 Calculate the production cost per unit and the total production cost for September 2018 3.4 Prepare the expected Cost of Sales Budget for July 2018.

Solution

1) Sales budget

2) Unit Production budget

C) Production cost per unit and total production cost for moth of september

D) Cost of sales is nothing but cost incur to manufacture the product which is sold

Thus Cost of sales = Container cost + direct labour

=7+2 = 9

Expected cost of sales of july = sales units*9

=12000*9

=108000

Particulars	July	August	September
Sales volume	12000	14000	10000
Selling price per unit	50	50	50
Total sales	600000	700000	500000