Budgeting Question
Zedbajeti Ltd (ZB) is embarking on budgeting for the forthcoming period and to this end data have been collected in preparation for this exercise. Some of these data are as follows:
1. Marketing research has shown that the company will be able to sell 12,000 units of the company product at a selling price of K150 per unit in the budget period.
2. Product costing data are as follows:
- Direct material 3 kgs @ K5 per kg = K15
- Direct labour 2 hours @ K10 per dlh = K20
- Production overhead 2 dlh @ K2.5 per hour = K5
- Product cost per unit = K40
3. Data about inventories are as follows:
- Opening Finished goods (units) = 1,500
- Closing Finished goods (units) = 2,500
- Opening Raw materials (kgs) = 1,500
- Closing Raw materials (kgs) = 4,500
4. Selling and distribution costs are expected to amount to 20% of the sales revenue.
5. Administrative expenses are expected to be 10% of the sum of selling and distribution expenses and production cost.
6. General expenses will be K47,500
7. Income tax will be at 25%
8. Board of Directors expect to declare dividends to the extent of 50% of net profit after tax
Additional information
- Share capital K250,000
- Share Premium K50,000
- Revenue reserves excluding the year’s retained profit Revenue reserves b/f = K171,470
- Non-current assets (Net Book Value) = K975,750
- Current assets excluding closing inventories of finished goods and raw materials = K315,620
- Current liabilities excluding income tax payable and dividends payable = K17,900
- Long term loan = K100,000
Required
Prepare all the budgets including the budgeted financial statements for the budget period.