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3 views

Assignment

Uploaded by

kphoa00
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MANAGEMENT ACCOUNTING 1

GROUP ASSIGNMENT

Company Leo Ltd. produces a single product K.

The company is preparing budgets for the 1st quarter of year 2025.

The forecasted sales are as follows:

Sales (No. products) Sale Price per


product
January 50,000 $10
February 52,000 $10
March 58,000 $10.99

The manufacturing costs per product K are:

- Materials: $ 2.5
- Labor: $ 3

Other costs:

- Depreciation of machinery: $30,000 / month


- Ultilities: $4,000 / month
- Factory rental: $60,000 / month. Payable at the end of the month.
- Administration salary: $8,000
- Selling expenses: A fixed cost of $1000. And a commission of $0.75 per
product sold.
- Machine hours for 1 product: 0.5 hr

Additional information

In March, Leo Ltd. plan to upgrade its production lines with an investment of
$25,000. Depreciated using straight line method over 5 years. The purchase
will happen in February with additional installing cost of $2,000.

Requirements:

1. Provide your own information about the missing costs


2. Calculate production cost per unit of Leo Ltd. using absorption
costing/variable costing.
3. Prepare a production budget for 1st quarter 2025. Assuming the
company will keep inventory level at the end of the month equal to 8%
of sales of the next month.
4. Prepare a cash budget for 1st quarter of 2025. Make adjustments if
necessary.

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