Question

Gbayike Company manufactures two products A and B. A forecast of the number of units to

be sold in the first seven months of year is given below: Months : January. Product A : 1000. Product B: 2800. February. Product A:1200. Product B: 2800. March. Product A : 1600 Product B:2400. April. Product A: 2000. Product B:2000. May. Product A: 2400. Product B:1600. June. Product A: 2400. Product B: 1600. July. Product A: 2000 Product B: 1800. It is anticipated that (1) there will be no working in progress at the end of any month (2) finished units equal to half the sales for the next month will be in stock at the end of each month ( including the previous December) . Budgeting production and production costs for the whole years as follows : Production unit Product A: 22000. Product B: 24000. Per unit ,direct material Product A: 12.50. Product B: 19.00. Total factory overhead apportioned Product A:66000. Product B: 96000. You are required to prepare for the 6month period ending 30th June , a production budget for each month and a summarized production cost budget

Answer 1

The monthly production budget, spanning January to June, includes units for Products A and B. Product A: 11,600 units, and Product B: 12,200 units. Product A: $12.50 per unit, $66,000 total factory overhead. Product B: $19.00 per unit, $96,000 total factory overhead.

To prepare a production budget for each month and a summarized production cost budget for the 6-month period ending June 30th, we need to calculate the number of units to be produced and the production costs for each product. We will use the sales forecast and the given information about finished units in stock at the end of each month.

Here is the production budget for each month:

January: Product A: 1000, Product B: 2800

February: Product A: 1200, Product B: 2800

March: Product A: 1600, Product B: 2400

April: Product A: 2000, Product B: 2000

May: Product A: 2400, Product B: 1600

June: Product A: 2400, Product B: 1600

And here is the summarized production cost budget:

Product A: Direct material cost: $12.50 per unit, Total factory overhead: $66,000

Product B: Direct material cost: $19.00 per unit, Total factory overhead: $96,000