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Question - Ichiban Industries has budgeted the following unit sales in 2021.
Month Units
January 10,000
February 12,000
March 15,000
April 11,000
May 8,000
The units are sold at an average price of RM20 per unit.
Each unit requires 2 kilograms of raw materials costing RM4 per kilogram. On December 31 2020, the ending raw material inventory was 4,240 kilograms.
It is the company policy to maintain a finished goods inventory at the end of each month equal to 30% of next month's anticipated sales.
Management wants to have a raw material inventory of the month equal to 20% of next month's production requirement.
Required -
a) Prepare sales budget for first quarter ended March 31 2021.
b) Prepare a production budget for the three-months ended March 31 2021.
c) Prepare a direct materials budget for the three-months ended March 31 2021.
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