Basic. RT is preparing the production budget for Product R and the material purchases budget for Material T for next year.

Each unit of Product R requires 6kg of Material T.

The estimated inventory at the beginning of next year for Product R is 6000 units and the company wants to decrease the inventory held by 10 per cent by the end of next year.

The estimated inventory at the beginning of next year for Material T is 60 000kg and due to problems with the material supplier the closing inventory atthe end of next year is to be increased to 75000kg. ;

The budgeted sales of Product R for next year are 80000 units.

Required:

(1) Calculate the production budget for Product R for next year. ;

(\i) Calculate the material purchases budget for Material T for next year. (4 marks)

CIMA Pi Performance Operations