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(b) Easecom Company manufactures and sells two products: Thingone and Thingtwo. The company is now planning the raw material requirements of the two products for
(b) Easecom Company manufactures and sells two products: Thingone and Thingtwo. The company is now planning the raw material requirements of the two products for 2019. To produce the two products the following raw material is required: Direct material Cost per kg Amount used per unit Thingone Thingtwo 5 kilograms 2 kilograms 3 kilograms $8.2 per kilogram $7.5 per kilogram B To keep production smooth, the company has the following inventory requirements: The finished goods inventories (in units): Finished goods Expected 1st January Thingone 2000 units Thingtwo 3000 units Desired 31st December 500 units 1000 units A sales budget for the two products for the year 2019 follows: Product Sales volume Thingone 6000 units | Thingtwo 4000 units Required: Using the information provided: i) Prepare a production budget (in units) for Thingone and Thingtwo for 2019. (2 Marks) ii) Prepare a direct materials budget showing the cost of material A and B required to be purchased for 2019. (2 Marks) (e) What is a budget? Identify two (2) purposes of budgeting. (3 marks) (b) Easecom Company manufactures and sells two products: Thingone and Thingtwo. The company is now planning the raw material requirements of the two products for 2019. To produce the two products the following raw material is required: Direct material Cost per kg Amount used per unit Thingone Thingtwo 5 kilograms 2 kilograms 3 kilograms $8.2 per kilogram $7.5 per kilogram B To keep production smooth, the company has the following inventory requirements: The finished goods inventories (in units): Finished goods Expected 1st January Thingone 2000 units Thingtwo 3000 units Desired 31st December 500 units 1000 units A sales budget for the two products for the year 2019 follows: Product Sales volume Thingone 6000 units | Thingtwo 4000 units Required: Using the information provided: i) Prepare a production budget (in units) for Thingone and Thingtwo for 2019. (2 Marks) ii) Prepare a direct materials budget showing the cost of material A and B required to be purchased for 2019. (2 Marks) (e) What is a budget? Identify two (2) purposes of budgeting
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