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PLEASE ATTEMPT ALL QUESTIONS

Question #1 (CL04) 35 marks

Homemade Scented Manufacturers produces two products from their signature fresh scent candles: Citronella and Gardenia. Both products use raw material fragrance oil and dye. Each unit of Citronella uses three (3) grams of dye and five (5) litres of fragrance oil. Each unit of Gardenia uses two (2) grams of dye and four (4) litres of fragrance od Each gram of dye is expected to cost $12 and a litre of fragrance oil $16.

Sales and finished goods inventory budget for the year 2022 are as follows: Gardenia

Citronella

Budgeted Sales

18,000 units

Budgeted Sales

16,000 units

Opening Inventory

3,500

units

Opening Inventory

2,500

units

Closing Inventory

1,800

units Closing Inventory 1,500 units

Selling Price

$350

Selling Price

$320

As at January 1, 2022, opening inventories of raw material are 800 grams of dye and 1,000 litres of fragrance oil. At the end of 2022, the company plans to hold 2,000 grams of dye and 1,800

litres of fragrance oil.

The warehouse and stores managers have suggested that a provision should be made for damagesa And deterioration of items held in store, as follows.

Products

Citronella

Loss of 120 units

Gardenia

Loss of 80 units

Raw Materials

Dye

Loss of 200 grams

Fragrance oil

Loss of 120 liters

Required:

Prepare the following budgets both products for the year 2022:

(a) Sales budget

(b) Production budget

(c) Raw material usage budget

(d) Raw Materials purchases