Alpha company produces two products that are sold to retailers. The budgeted sales volumes for the next quarter are as follows:

Product units

X 32,000

Y 56,000

The inventory of finished goods is budgeted to increase by 1000 units of X and decrease by 2000 units of Y by the end of the quarter.

Material A and B are used in production of both products. The quantities required of each material is to produce one unit of the finished product and the purchase prices are show in the table below:

A B

X 8kg 4kg

Y 4kg 3kg

Purchase price per kg $1.25 $1.80

Budgeted opening inventory 30,000kg 20,000kg

The company plans to hold inventory of raw materials at the end of the quarter, equal to 5% of the quarter's material usage budget.

Required:

A) prepare the following budget for the quarter

(I)The production budget in units

(II)The material usage budget( in kg)

(III)The material purchase budget (in kg and $)

B) What is the master budget and why is it useful?