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Posted: November 16th, 2024
A Ltd. manufactures a single product P with a single grade of labor
A Ltd. manufactures a single product P with a single grade of labor. The sales budget and finished goods stock budget for the 1st Quarter ending on 30th June 2008 are as follows.Sales: 1,400 unitsOpening finished units: 100 unitsClosing finished units: 140 unitsThe goods are imported only when production work is complete and it is budgeted that 10% of finished work will be scrapped. The standard direct labor content of the product P is 3 hours. The budgeted productivity ratio for direct labor is 80% only. The company employs 36 direct operatives who are expected to average 144 working hours each in the 1st quarter. You are required to prepare,I] Production Budget II] Direct Labor Budget and III] Comment on the problem that your direct labor budget reveals and suggest how this problem might be overcome.
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