Sheds Ahead Ltd produces outdoor sheds for domestic use. The manager in charge of production has been asked to prepare a production budget, a direct materials budget and a direct labour budget for part of 2020 based on the company’s sales forecast.

The materials and labour requirements per shed are as follows.

The business requires a finished goods ending inventory for each quarter that equals 30% of expected sales for the next quarter. Also, the ending inventory balance of direct materials should equal 25% of the next quarter’s production requirements. The inventory balances on 1 January 2020 are forecast as shown below.

Required

(a) Prepare a quarterly production budget, in units only, for the first three quarters of 2020.

(b) Prepare a direct materials budget for the first two quarters of 2020 in both units and dollars.

(c) Prepare a direct labour budget for the first two quarters of 2020.

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Sheet metal Enamel paint Cutting and welding labour Assembly Quantity 25 square metres 10 litre 3 hours 1 hour Cost $24 per square metre 12 per litre 18 per hour 21 per hour