Reference no: EM133163828

Question - Operational Budget - Bear Limited manufactures teddy bears from fur pile material and stuffing in two departments, namely cutting &sewing and assembling. The following information is available for 2018:

Manufacturing overheads are absorbed at 20% of direct labour cost. The sewing and embroidery thread usedin the cutting & sewing department is part of manufacturing overheads. Projected sales for 2018 are 50 000 units. Bear Limited prices its products at production cost plus 50%. Opening inventory on 1 January 2018 wasas follows (the costs/prices for 2017 and 2018 are identical):

Fur pile 50 meters

Stuffing 25 kilograms

Teddy bears 200

Management believes these inventory levels are insufficient and plans to increase the individual inventory levels by 200% by the 2018 financial year-end. Bear Limited pays a sales commission of 2% to its sales staff. Fixed administration costs are expected to be R500 000 for the 2018 financial year.

Required -

1. Calculate the budgeted cost per unit as well as the unit selling price.

2. Compile the sales budget.

3. Compile the production budget.

4. Compile the direct material purchases budget.

5. Compile the direct labour budget.

6. Compile the manufacturing overheads budget.

7. Compile the cost of sales budget.

8. Compile the projected income statement.