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Budgetary Process Bake Ltd manufactures two products, known as AP and SG. AP is produced in department 1 and SG in department 2. The following...

Budgetary Process

Bake Ltd manufactures two products, known as AP and SG. AP is produced in department 1 and SG in department 2. The following information is available for 2012.

           Standard material and labour costs:                                            £

                       Material S                                                                 7.20 per unit

                       Material T                                                                  16.00 per unit

                       Director Labour                                                       12.00 per unit

Overhead is recovered on a direct labour hour basis.  The standard material and labour usage for each product is as follows:

                                                                       Model AP                  Model SG

                       Material S                             10 units                     8 units

                       Material T                              5 units                       9 units

                       Direct Labour                       10 hours                   15 hours

           The balance sheet for the previous year ended 2012 was as follows:

                                                                                   £                     £                     £

           Fixed Assets:

           Land                                                                                        170,000

           Buildings and equipment                           1,292,000     

           Less: depreciation                                        255,000     1,037,000     1,207,000

           Current Assets:

           Inventories:  Finished goods                      99,076

                                   Raw materials                       189,200

           Debtors                                                          289,000

           Cash                                                                34,000

                                                                                    611,276

           Less: current liabilities                               

           Creditors                                                        248,800                                362,476

           Net assets                                                                                                    1,569,476

           Represented by

           1,200,000 ordinary shares of £1 each                           1,200,000

           Reserves                                                                                369,476

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