Direct material will be consumed at the same amount

Reference no: EM133608901

Question: Smart Manufacturers As a result of the COVID pandemic Smart Manufacturers has identified an opportunity where the company produces sanitizing hand towels mainly for the healthcare industry. Actual information for the year ended 31 July 2019: 1. Sales for the year amounted to 130 000 at R50 per towel. 2. 120 000 towels were manufactured during the year. 3. Direct materials consumed was 60 cm per towel. 4. Direct material was purchased at R15 per meter. 5. Direct labour amounted to 21 000 hours at R30 per hour. 6. Manufacturing overheads were R1 500 000. 7. Closing inventory on 31 July 2019: Direct material, 5 000 meters. Finished products, 21 000 hand towels Budgeted information for year ended 31 July 2020: 1. Expected increases: Hand towel sales will increase by 20%. The selling price will increase by 5%. Manufacturing overheads will increase by 15%.

1. Direct material will be consumed at the same amount and price.

2. According to a new labour agreement, direct labour will be R33 per hour.

3. Production time will be 10% less than the 2019 financial year.

4. Closing inventory on 31 July 2020: Direct material, 6 000 meters. Finished products, 14 000 hand Sales

Reference no: EM133608901

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