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JC Paints JCP) produces a specialist fire retarding paint. Projected sales (in units) foi the paint in litres for 2020 2023 2020 2021 120,000 130,000
JC Paints JCP) produces a specialist fire retarding paint. Projected sales (in units) foi the paint in litres for 2020 2023 2020 2021 120,000 130,000 135,000 135,000 2022 2023 . Current sales price in 2019 is $8 per litre (expected to increase by 5% in 2020 and then remain stable for 3 years) * Inventories are planned so that projected ending finished goods inventory is 15% of the following year's projected sales in units The per unit raw material requirements for one litre of the product are as follows: Cost per litre/kgunit $0.50 $2.00 0.20 Base paint litres Additives kilograms 0.1 0.8 Container (1 per unit) The desired materials ending inventory is 30% of that required for the next year's production. Opening materials inventories 2020: Base paint litres Additives kilograms3.800 Containers nits 34,500 42,000 Opening finished goods inventories (in units) 2020: 14,000 The desired ending finished goods inventory is equal to the 10% of following year's sales in units. Required For the two vears 2020 and 202l: (note: use the excel template provided on studydesk) i. Prepare a sales budget in units and dollars (5 marks) ii. Prepare a production budget in units for the paint product. (9 marks) iii Prepare direct materials usage budgets in units for each of the materials (separate budgets) and calculate the dollar purchases for each, showing the 2 years, for the paint product. (16 marks) iv. Calculate the total value of materials purchases each year. (2 marks)
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