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AAT Budgeting

Week 6
Revision Solutions

Task 1

Production days = 12*5 = 60 days
Closing stock of finished goods:
Aye = 1,500*5/60 = 125 units
Bee = 2,400*5/60 = 200 units

Labour hours available before overtime
= 12 weeks * 35 hours * 70 employees
= 29,400 hours

Production budget
Aye Bee
Units Units
Sales 1,500 2,400
Less opening stock (160) (300)
Add closing stock 125 200
1,465 2,300
Faulty production
1,465*2/98 30
2,300*2.5/97.5 59
1,495 2,359

Material purchases Kg
1,495 * 4kg 5,980
2,359 * 7kg 16,513
Material usage 22,493
Less opening stock (2,800)
Add closing stock (22,493 * 6/60) 2,250
Material purchases 21,943

Material purchases budget = 21,943 * £10 = £219,430

Labour hours budget Hours
Standard hours
Aye 1,495 * 10 hours 14,950
Bee 2,359 * 7 hours 16,513
31,463

Labour budget value £
Standard rate (35*12*70) = 29,400 hours * 8 235,200
Overtime (31,463 – 29,400) = 2,063 hours * 12 24,756
259,956
Cost savings:
Opening stock Closing stock Reduction Saving
Aye 160 125 35*6 210
Bee 300 200 100*7 700
Raw materials 2,800 2,250 550*2 1,100
2,010
Task 2
A) Week 1 Week 2
£ £ £ £
Sales 24,000 40,000
Less cost of sales
Opening inventory 5,000
Costs of production:
Direct materials 5,000 5,000
Direct labour 9,000 9,000
Fixed overheads 6,000 6,000
Less
Closing inventory (5,000) -
(15,000) (25,000)
Profit 9,000 15,000

B)
Week 1 Week 2
£ £ £ £
Sales 24,000 40,000
Less cost of sales
Opening inventory 3,500
Variable cost of production:
Direct materials 5,000 5,000
Direct labour 9,000 9,000
Less
Closing inventory (3,500) -
(10,500) (17,500)
Contribution 13,500 22,500
Less fixed overheads (6,000) (6,000)
Profit 7,500 16,500

2)   The...