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Prepare the sales budget for the quarter ending 30 June 2026, showing adjusted quantities and total revenue by division and in total.

Business/Management

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Step-by-step solution

4 steps

Here are the solutions to the budgeting questions:

Part a

Sales and Production Budget

Part f· 2 steps

Prepare the sales budget for the quarter ending 30 June 2026, showing adjusted quantities and total revenue by division and in total.

  1. Calculate adjusted sales units for each product and division.

    • Slab Units:
      • North: 8,000 units+1,500 units (marketing campaign)=9,500 units8,000 \text{ units} + 1,500 \text{ units (marketing campaign)} = 9,500 \text{ units}
      • Central: 14,000 \text{ units} \times 1.10 \text{ (10% upward revision)} = 15,400 \text{ units}
      • South: 10,000 units10,000 \text{ units} (no change)
    • Panel Units:
      • North: 5,500 units+1,500 units (marketing campaign)=7,000 units5,500 \text{ units} + 1,500 \text{ units (marketing campaign)} = 7,000 \text{ units}
      • Central: 9,000 \text{ units} \times 1.10 \text{ (10% upward revision)} = 9,900 \text{ units}
      • South: 7,000 units+2,000 units (additional sales)=9,000 units7,000 \text{ units} + 2,000 \text{ units (additional sales)} = 9,000 \text{ units}

  2. Prepare the Sales Budget.

    Molapo Manufacturing Ltd
    Sales Budget for the Quarter Ended 30 June 2026

    DivisionProductAdjusted UnitsSelling Price (P)Total Revenue (P)
    NorthSlab9,5001801,710,000
    Panel7,0002601,820,000
    CentralSlab15,4001802,772,000
    Panel9,9002602,574,000
    SouthSlab10,0001801,800,000
    Panel9,0002602,340,000
    TotalSlab34,9006,282,000
    TotalPanel25,9006,734,000
    Grand TotalP13,016,000

Part g· 2 steps

Prepare the production budget for each product for the quarter ending 30 June 2026.

  1. Calculate desired closing stock for each product.

    • Desired Closing Stock (Slab Units) = 34,900 units (budgeted sales)×20%=6,980 units34,900 \text{ units (budgeted sales)} \times 20\% = 6,980 \text{ units}
    • Desired Closing Stock (Panel Units) = 25,900 units (budgeted sales)×20%=5,180 units25,900 \text{ units (budgeted sales)} \times 20\% = 5,180 \text{ units}

  2. Prepare the Production Budget.

    Molapo Manufacturing Ltd
    Production Budget for the Quarter Ended 30 June 2026

    DetailsSlab UnitsPanel Units
    Budgeted Sales (units)34,90025,900
    Add: Desired Closing Stock (units)6,9805,180
    Less: Opening Stock (units)(3,200)(2,100)
    Budgeted Production (units)38,68028,980

Part h

State, with a reason, which functional budget must always be prepared first and why this determines the sequence for all other budgets.

The Sales Budget must always be prepared first. This is because the sales budget establishes the expected level of sales activity (in units and revenue) for the budget period. All other functional budgets, such as the production budget, direct materials budget, direct labour budget, and overhead budget, are directly dependent on and derived from the sales volume determined in the sales budget. Without a clear sales target, it is impossible to accurately plan for production and resource requirements.

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