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Question 3: [18 marks] You need to prepare the budget for Yellow tree for the quarter...

Question 3: [18 marks]
You need to prepare the budget for Yellow tree for the quarter ending June 2018. The budget must be prepared monthly. The quarter consists of 13 weeks. The forecasted sales are as follows:

April
4 weeks		 May
5 weeks		 June
4 weeks		 July
4 weeks
Sales Units 1,250 1,500 1,750 1,800

The company’s policy changed the inventory policy to keep closing inventory of completed units at 25% of the following month’s sales. Opening inventory on the 1st of April was 475 units.
The labour information is as follows:

Normal working hours 8 hours per day
Weekend work None, only if overtime is required.
Number of employees 20 currently
Additional 10 employees will be employed for the month of June
Normal time rate R32.50 per hour
Overtime rate 30% above normal time rate per hour
Hours per unit 3 hours

Required:
1. Calculate the production budget for the quarter. (3)
2. Calculate the budgeted labour hours per month. Split the hours between normal time and overtime. (9)
3. Calculate the budgeted labour cost monthly. Split the cost between normal time and overtime. (6)

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