Sales budget - budgeting

amyjayne27 Registered Posts: 314 Dedicated contributor 🦉
Hi all,

Wondering if someone can help me with a question? I keep pestering my tutor and I think he's sick of me haha!

I am working my way through the budgeting book (Osborne) chapter 3 and question 3.8 has thrown me. It requires me to calculate the sales budget that makeup cost of production for April. It gives you the budget for the year and the various figures for sales, cost of production etc and for April you need to apportion these figures to show the budget just for April.

I am stuck with labour. The figure for the budget for year is 64800. Extra information is it takes 24 minutes to make each item, labour cost is 12 pound per hour. Units produced is 2500. So I had a sneaky peek at the answer and it states that 2500 units x 24 minutes x 12 pound per hour. Now I may be going crazy after 3 hour of studying but I cannot see how that makes the figure of 12000 for April?

I have probably not explained this well at all so no worries if no one can help!



  • Jo Clark
    Jo Clark Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
    Hello Amy

    £12 is per hour. Each unit takes 24 minutes.

    2,500 x 24 minutes = 60,000 / by 60 minutes = 1,000 x £12 = £12,000

    Does this help?

    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • aaron0121
    aaron0121 Registered Posts: 422
    Hi Amy,

    That formula works you just need to convert the minutes into hours so 24/60 = 0.4

    Then 2500*0.4*12=12000 :)

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  • amyjayne27
    amyjayne27 Registered Posts: 314 Dedicated contributor 🦉
    Well don't I feel silly! Thank you so much for your replies it makes total sense. I think it's time for bed!
    Thanks again
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