Ketton Ltd is in the process of preparing direct labour and factory overhead budgets for the year ending 30 June 2017. Relevant data are set out…

Ketton Ltd is in the process of preparing direct labour and factory overhead budgets for the year ending 30 June 2017. Relevant data are set out below:

Production: 21 000, 41 000, 41 500, 51 000 units per quarter

Direct labour: Hourly rate is $18 per hour. Each unit requires 2.5 hours of labour

Factory overhead:

Fixed overhead costs per quarter —

Salaries, $71 500

Depreciation, $31 000

Rent, $60 000

Variable overhead —

Indirect materials, $3.50 per direct labour hour

Indirect labour, $2.60 per direct labour hour

Other, 30c per direct labour hour


A. How to prepare the direct labour budget by quarter for the year ending 30 June 2017.

B.   How to prepare the factory overhead budget by quarter for the year ended 30 June 2017.

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