Question:
Production and purchase budgets
The following are the estimates of a company for 8 months ending 31 December 2009:
|
Month
|
|
Estimated Sales (Units)
|
|
April 2009
|
8,000
|
|
May 2009
|
10,000
|
|
June 2009
|
12,000
|
|
July 2009
|
8,000
|
|
August 2009
|
7,000
|
|
September 2009
|
10,000
|
|
October 2009
|
13,000
|
|
November 2009
|
15,000
|
As a matter of policy, the company maintains the closing balance of finished goods and raw materials as follows:
|
Stock item
|
Closing balance of months
|
|
Finished goods
|
50% of the estimated sales for the next months.
|
|
Raw materials
|
Estimated consumption for the next month.
|
Every unit of production requires 2 kg of raw material costing Rs. 10 per kg.
You are required to prepare (a) production budget (in units) and (b) raw-material-purchase budget (in units and cost) of the company for the period ending 30 September 2009.