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(7 minutes) SFS Aluminium Ltd (SFS), manufacture 90 short radius pressed aluminium elbows which they supply to the aftermarket automotive industry. SFS is preparing its
(7 minutes) SFS Aluminium Ltd (SFS), manufacture 90 short radius pressed aluminium elbows which they supply to the aftermarket automotive industry. SFS is preparing its purchases budget for aluminium for the upcoming financial year. The opening inventory of aluminium is expected to be 2 500kg and the price is expected to be R480 per kilogram. Each unit 90 short radius pressed aluminium elbow requires 200g aluminium. Budgeted sales of 90 short radius pressed aluminium elbows for the upcoming financial year and the year thereafter are 80 000 units during each year. Sales will occur evenly throughout each year. The opening inventory is expected to be 10 000 units. SFS will implement a new inventory policy from the first month of the upcoming financial year. According to this new policy, the closing inventory requirements are as follows: for the 90 short radius pressed aluminium elbows it will be one month's sales requirement, and for aluminium it will be one month's production requirement. Marks Subtotal Total REQUIRED: 2. Prepare the aluminium purchases budget for the upcoming financial year. TOTAL MARKS 4
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