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8 marksBudgeting and the Master Budget

CAPE Accounting Unit 2 · 2018 · Paper 2 · Question 3(b)(i)

The Lambeth Company manufactures wooden office desks. Budgeted sales: August 620, September 530, October 580, November 600, December 680 units. Each desk requires 40 sq ft of lumber at $85/sq ft. Desks finished inventory target is 20% of next month's sales (August beginning inventory = 124 desks). Lumber inventory target is 15% of next month's needs (August beginning inventory = 3612 sq ft; ending October 31 estimated at 3696 sq ft).

Prepare, for EACH of the months of August, September and October 2018, the production budget.

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Other parts of this question

  1. 3(a)Outline THREE objectives of budgeting.[6 marks]
  2. 3(b)(ii)Prepare, for EACH of the months of August, September and October 2018, the schedule of direct materials required.[13 marks]
  3. 3(c)(i)Explain the concept of 'standard costing'.[4 marks]
  4. 3(c)(ii)State TWO types of standard costing and explain ONE type.[4 marks]

More practice: the rest of this paper · more Budgeting and the Master Budget questions · all CAPE Accounting Unit 2 past papers