Campbell Manufacturing intends to start business on January 1, 2011. Production plans for the first four months of operations are as follows:
January ………….20,000 units
February …………50,000 units
March ……………70,000 units
April ………………70,000 units
Each unit requires 2 pounds of material. The firm would like to end each month with enough raw material to cover 25 percent of the following month’s production needs. Raw material costs $7 per pound. Management pays for 40 percent of purchases in the month of purchase and receives a 10 percent discount for these payments. The remaining purchases are paid in the following month, with no discount available.
a. Prepare a purchases budget for the first quarter of 2011 in units, in total, and in dollars.
b. Determine the budgeted payments for purchases of raw materials for each of the first three months of operations and for the quarter in total.
c. Where in the budgeted financial statements do the purchase discounts appear?
Inoca private limited produces two products ranges: the standard range and special range. During the July, 300 standard windows and 50 specialized windows were manufactured and indirect production costs of $73000 were incurred. An analysis of indirect costs reveals the following activities. Activity Cost Driver Total Cost Material Handling Number of requisitions $25000 Machine Setups Number of set ups $27000 Quality inspections Number of inspections $21000 The cost driver volume for each product was as follows. Cost driver Specialized Standard Total Number of requisitions 400 600 1000 Number of setups 150 300 450 Number of inspections 200 400 600 Indirect activity cost rate for each activity. Allocate the indirect manufacturing overhead costs for July to the products using activity cost rates calculated in (a) above Write a memo to the managing director of Inoca private limited explaining the benefits of activity based costing Volume-based cost drivers are no longer appropriate in today’s business environment”. Discuss. TASK 2: Managerial Planning Leeway Maldives (Pvt) Ltd has the capacity to manufacture 50,000 units annually of its only product. The following information is available. Selling price $26 per unit Variable manufacturing costs $12 per unit Fixed manufacturing costs $180,000 annually Fixed selling and administrative costs $120,000 annually Variable selling and administrative costs $ 4 per unit Calculate the number of units that need to be sold annually to break even. 3 How many units would need to be sold to earn a target annual profit of $120,000? In an attempt to achieve better results in the marketplace, management has been looking at changing the reward systems for making, distribution and sales personnel. This would result in an increase in variable selling and administrative costs by $2 per unit, and would reduce fixed selling and administrative costs by $50000. Calculate the number of units required to…