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DUE DATEAugust 4, 2021                MARKS10


To develop an understanding regarding the Production, Functional and Master budgets


Question: Following information has been extracted from the books of Noor Company and the information is related to manufacturing of a product named XYZ. Following sales budget in units has been estimated based on region client age.



East Region

West Region

North Region














According to company policy, following will be the Finished Goods inventory in units.


January 1


January 31


February 28


March 31


Following material (A, B and C) and labor costs were added to manufacture XYZ.

  • Material A         2 kg @ Rs. 6 per kg (for manufacturing 1 unit)
  • Material B        10 pieces @ Rs. 2 per piece (for manufacturing 1 unit)
  • Material C        1 liter @ Rs. 10 per liter (for manufacturing 1 unit)

4 hours were required labor hours to manufacture a unit at rate Rs. 250 per hour


  1. Do you think that any change in the desired finished goods inventory on January 1 will affect the production requirement for the month of January, February and March? Justify the
  2. How production requirement for the month of January, February and March will be affected due to decrease in desired finished goods inventory on January 31. Provide justification with your No working is required
  3. Describe which functional budget(s) will be affected due to decrease in desired finished goods inventory on January 31 and how the change will reflect in the Master
  4. At the end of the first quarter; it was observed that there was difference in obtained results with budgeted It was reported that desired finished goods inventory on January 31; was 1,000 units but not 1,400 units. Prepare the direct material cost budget for the month of February. Provide complete working in proper format


NOTE: Discuss the affect in particular direction as mentioned in part (b) and (c) on monthly basis and quarterly as well. Recall the concept of production budget while commenting on part (a), (b) and (c)



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Note related to load shedding: Please be proactive


Dear students, 

As you know that Post Mid-Term semester activities have been started and load shedding problem is also prevailing in our country now a days. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

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