CD Ltd is a manufacturing company that produces and sell a single product. The company has the following budgeted sales for a six month period:

Month Unit

September 40,000

October 60,000

November 70,000

December 90,000

January 50,000

February 40,000

CD has also provided the following information:

The companys policy is that inventory of finished goods at the end of each month should be equal to 25% of the next months sales.

Each unit produced requires 6 kilos of material, and each kilo costs $15. Inventory levels for material at the end of each month is 20% of the next months requirements.

80% of raw material purchases is paid for in the month of purchase so that CD may benefit from a 2% settlement discount. The balance is paid in the following month.

Required: Prepare for October, November and December

Production Budget (8 marks)

Material purchases budget (15 marks)

Schedule of cash payments for materials purchased. (7 marks)