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Assignment Question
ABC Company prepares budget on quarterly basis and following information has been extracted from the books to prepare budget for second quarter ending on 30th June. Budgeted sales for the next six months are as follows:
Month Sales (Units)                                     Month Sales (Units)
April 25,000                                                        May 55,000
June 35,000                                                          July 30,000
August 25,000                                             September 20,000        
Management of the Company wants to maintain ending inventory to be 15% of the following month’s budgeted sales in units. On March 31st, available inventory was 4,500 units.

1. Prepare the production budget with the help of given information.

2. Prepare the direct materials budget with the help of following information and production budget prepared in requirement 1.

Seven kg of material is required to manufacture a unit of product and  management wants to maintain materials on hand at the end of each month equal to 18% of the following month’s production. On March 31st
; 40,530 pounds of material were available in inventory.

NOTE: Provide complete working/calculation inappropriate format where necessary.


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