Question 1 (10 marks)

A single product company estimated it’s quarter wise sales for the next year as under:

Quarter Sales (Units)

I 30,000
II 37,500
III 41,250
IV 45,000

The opening stock of finished goods is 6000 Units, and the company wishes to keep closing stock of
12,250 Units. The production pattern of the quarter is based on 80% of sales of current quarter and
20% of sales of ensuing quarter.

The ensuing quarter’s sale is maintained as closing stock for the current quarter.

The opening stocks of raw materials is 10,000 kgs. & the closing stock that is to be maintained is
5,000 kgs.

Each unit of finished product requires 2 kgs of raw materials.

The company plans to procure the annual requirement of raw materials in the first 3 quarters as
under:

Quarter Purchase of Raw Materials as a % of total annual Price per kg.

requirement (qty)
I 30% 2
II 50% 3
III 20% 4

The value of opening stock is Rs 20,000.

Prepare

a) Production budget (units)

b) Raw Material Consumption budget (qty.)
c) Raw Materials Purchase budget (qty. & value)
Question 2 (10 marks)

National Petroleum Ltd uses standard costing systems for manufacturing product X. Following is
the budget data given in relation to the manufacture of 1 unit of finished product:

Labour Hours Rate / hr

Skilled 2 6
Semi-skilled 3 4
Unskilled 5 3

In the month of Feb’21, 10000 units were produced with following details:

Labour Hours Rate / hr

Skilled 18000 7
Semi-skilled 33000 3.5
Unskilled 58000 4

The idle time (lost) are, 500, 700 & 800 hours, respectively.

Calculate all labour variances.