Calculate own production cost

Assignment Help Accounting Basics

Reference no: EM132673852

You have a tea stall in operation at Ramna park since 2015. Information of your business in 2018 are as follows:

Selling price was BDT 15 per cup

Average Sales volume was 225 cup per day

Annual sales growth was 15%

Price increases by 10% every year

Monthly average selling and administration cost of the stall was:

Police Commission = BDT 500/month

Rent = BDT 1,000/month

Utility = BDT 200/month

Depreciation = BDT 60/month

Salary (Production) = BDT 8000/ Month

Sales (sales + admin ) = BDT 10000/Month

During a normal situation, the following growth has been observed:

Raw material cost increases by 10% every year

Labor cost increases by 8% every year

MOH cost increases by 12% every year

Selling and administration cost increases by 4% every year

Problem 1: Make a Master Budget (Sales/Production/RM/Labor/MOH/Selling & Administrative/Cash budget) for the year 2019 (Pre CORONA virus year ) and another Master Budget for the year 2020 (CORONA virus year). You need to calculate your own production cost (raw material cost + labor cost + MOH cost) and opening/closing inventory. Show details/breakdown of your calculation.

Problem 2: Give reasons of any changes of you assumptions between 2019 and 2020 Master Budget i.e., pre COVID 19 situation and during COVID 19 situation.

Reference no: EM132673852

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