Inventory Valuation and Budgeting 40 Marks Study the scenario and complete the questions that follow. Crowly Ltd The following information relates to the production and sale of one of the products manufactured by Crowly Ltd, during the first quarter of 2021. Production Sales Unit price Selling price Units Units R R 3 600 90.40 180 January February March 3 400 1 600 180 3 000 4 000 1 200 90.30 91.60 180 On 1 January 2021, the opening inventory consisted of 200 units with a cost price of R90.00 each. Production occurred during the month and sales occurred at the end of the month. Additional information: Production costs are expected to increase, and it was decided to increase the selling to R200. The following information is projected for the remainder of the year: 1. Opening stock at the beginning of the second quarter is as follows: Finished goods: 600 units Raw materials: 5000 kg 2. Budgeted sales for the remainder of 2021 are as follows: Second quarter. 3 000 units Third quarter: 4 500 units Fourth quarter. 3 600 units 3. The company plans to hold sufficient finished goods stocks to meet one third of the forthcoming quarter's sales. 4. The Budgeted raw material and labour per unit are as follows: Raw Material: 4kg @ R20/kg Direct Labour: 24 minutes @ R40/h 5. Raw material inventories will be maintained as follows: 30 June 2021: 6 750 kg 30 September 2021: 4 500 kg Source: Daniels 120213 Question 3 3.1 Use the weighted average cost (WAC) method and prepare the inventory ledger for the first quarter. (16 Marks) 3.2 Calculate the cost of sales for the first quarter. (1 Mark) 3.3 Calculate the sales for the first quarter. (2 Marks) 3.4 Calculate the gross profit for the first quarter. (1 Mark) Note: Where applicable, round off to two decimals. Question 4 Prepare the following budgets for the second and third quarters: 4.1 Sales budget 4.2 Production budget 4.3 Material usage budget 4.4 Material purchases budget 4.5 Direct labour budget (2 Marks) (6 Marks) (2 Marks) (6 Marks) (4 Marks)