National Quality Paint Inc. (NQPI) produces paints in Geelong, Victoria. The accountant has presented you the following budgeted data for the fourth quarter of 2021. Sales are forecasted to be 60,000 cans at a price of $40 per can. The budgeted beginning and ending finished goods inventories are 4,000 and 9,000 units respectively. It is estimated that each can of paint requires two kilograms of input at a budgeted price of $5 per kg. The beginning raw materials inventory is estimated as 3,000 kilograms. NQPI wants to keep ending raw materials inventory of 4,200 due to fluctuations in demand. Production of each can is estimated to take 2 hours of labour at a standard pay rate of $18 per hour.

Required: (please show all steps of your computation in proper format)

1. Prepare sales budget for the fourth quarter of 2021. (1 marks)
2. Prepare production budget for the fourth quarter of 2021. (1.5 marks)
3. Prepare direct material purchases budget for the fourth quarter of 2021. (1.5 marks)
4. Prepare direct labour budget for the fourth quarter of 2021. (1 mark)
5. Mr Larry started a business by acquiring a medium sized manufacturing firm. He hired you to work in the accounting department. You are in charge of providing management accounting reports to aid him in the planning and control of operations and make sure that everything the company does is consistent to the plan. He advised you not to implement a standard costing system as he does not see any purpose in doing that. What is your reaction to his advice? If you don't agree with his idea, how do you convince him to accept the importance of standard costing? (1 mark)