Assignment: Computer Lab Exercise

Charcoal Best Ltd produces barbecues for domestic use. The manager in charge of production has been asked to prepare a production budget, a direct materials budget and direct labour budget for part of 2014 based on the company's sales forecast.

The materials and labour requirements per barbecue are:

                                               Quantity                       Cost

Sheet metal                              3 square meter              $24 per square metre

Enamel paint                             1 litre                           $12 per litre

Cutting and welding labour         3 hours                        $16 per hour

Finishing labour                         1 hour                         $12 per hour

The business requires a finished goods ending inventory for each quarter that equals 20% of expected sales for the next quarter. Also, the ending inventory balance of direct materials should equal 25% of the next quarter's production requirements. The inventory balances on 1 January 2014 are forecast as:

Sheet metal      6,200 square metres

Enamel paint     1,200 litres

Barbecues        240 units

The forecast quarterly sales in units are:

First quarter 2014     12,400

Second quarter 2014  6,200

Third quarter 2014      8,800

Fourth quarter 2014  14,200

Using Microsoft Excel you are required to:

A. Prepare a quarterly production budget, in units only, for the first three quarters of 2014

B. Prepare a direct materials budget for the first two quarters of 2014 in both units and dollars.

C. Prepare a direct labour budget for the first two quarters of 2014.