Prepare the production budget and the material budgets

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Question - Abaco Company manufactures and sells a product called Dressie. The company recently engaged you to assist in budgeting activities of the organization. The following data is available in relation to projections for June 2022:

Product Dressie

Projected sales [units] 1,200

Budgeted selling price per unit P87.00

Opening stock of finished goods [in units] 400

Budgeted closing stock [in units] 500

Each Dressie requires 8.5 meters of direct material to produce. Opening stock level of direct materials was 100 metres. In preparation for year-end, inventory levels will be increased by 20%.

Required -

1. Prepare the Production budget and the Material Budgets.

2. In relation to the Materials Budget prepared in [i] above, comment on inventory levels maintained by the Abaco Company. Would you change these inventory levels, or would you maintain them? Explain.

Reference no: EM133157371

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