53. Rocky Ltd Rocky Ltd is a small business based in Napier, it sells one product which it manufacturers itself. It is currently in the process of establishing the fourth-quarter budget for 2015. Mark Leewood, the production manager has only been working for the company for a month, and is a little bit worried about aligning the production processes. He has asked for your help and provided you with the following information: The product sells for $325 per unit Estimated sales volume in units for the next six months is: September 65,000- October 70,000 November 60,000 December 110,000+ January 45,000 February 50,000 Rocky Ltd's policy is to maintain ending finished goods inventory each month at a level equal to 40% of the next month's budgeted sales. To make one unit of finished product, 5 kilos of direct materials are required. + Rocky Ltd's policy is to have enough materials on hand at the end of the month to equal 30% of next month's usage. The cost per kilogram of material is $22.50. The product's contribution margin is $250. 1. 2. Prepare a production budget for Mark Leewood, in units for the last quarter of 2015.- Prepare a materials purchases budget for Mark, in kilograms for October and November 2015.- What is the cost of purchases in October? Why is it important in a manufacturing environment to prepare a production and purchases budget? Answer with reference to the planning and control cycle. 3. 4