You are required to prepare the Sales and Production Budget for the 1st Quarter of 2006 for a manufacturing company which submits the following figures for the first quarter of 2005:
Product Product Product
A B C
Sales (in units) : January 25,000 30,000 10,000
February 20,000 25,000 10,000
March 30,000 35,000 10,000
Selling Price per unit Rs. 10 Rs. 20 Rs. 40
Targets for 1st Quarter of 2006:
Sales quantity increase 20% 10% 10%
Selling price increase Nil 10% 25%
Stock position on 1st Jan.2006
Percentage of Jan 2006 sales 50% 50% 50%
Stock position on 31st March 2006 20,000 25,000 5,000
Stock position-end Jan and Feb
Percentage of next Month’s sales 50% 50% 50%
Solution.
Sale Budget (in units and Rs.)
for the period of first quarter of 2006
| Period | January | February | March | ||||||
| | Unit | Rate | Amt. | Unit | Rate | Amt. | Unit | Rate | Amt. |
Product | | | | | | | | | |
| A | 30000 | 10 | 300000 | 24000 | 10 | 240000 | 36000 | 10 | 360000 |
| B | 33000 | 22 | 726000 | 27500 | 22 | 605000 | 38500 | 22 | 847000 |
| C | 11000 | 50 | 550000 | 11000 | 50 | 550000 | 11000 | 50 | 550000 |
| Total | 74000 | | 1576000 | 62500 | | 1395000 | 85500 | | 1755000 |
Production Budget
| Period | Jan | Feb | Mar |
Product | | | |
A | | | |
| Closing bal | 12000 | 18000 | 20000 |
| Add : sale | 30000 | 24000 | 36000 |
| | 42000 | 42000 | 56000 |
| Less: Opening bal. | 15000 | 12000 | 18000 |
| Budgeted production | 27000 | 30000 | 38000 |
B | | | |
| Closing bal | 13750 | 30250 | 25000 |
| Add : sale | 33000 | 27500 | 38500 |
| | 46750 | 57750 | 62500 |
| Less: Opening bal. | 16500 | 13750 | 31250 |
| Budgeted production | 30250 | 44000 | 32250 |
C | | | |
| Closing bal | 5500 | 5500 | 5000 |
| Add : sale | 10000 | 10000 | 10000 |
| | 15500 | 15500 | 15000 |
| Less: Opening bal. | 5500 | 5500 | 5500 |
| Budgeted production | 10000 | 10000 | 9500 |
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