Question 1: Budgeting question Bold Manufacturing has projected sales of its product for the next six months as follows: July 80 units August 180 units September 200 units October 160 units November 60 units December 140 units The product sells for $200, variable expenses are $140 per unit, and fixed expenses are $8000 per month. The finished product requires 6 units of raw material and 11 hours of direct labour. The entity tries to maintain an ending inventory of finished goods equal to the next two months of sales and an ending inventory of raw materials equal to half of the current month's usage. Required (a) Prepare a production budget for February, March and April (5 marks) August September October Desired ending inventory 360 220 200 Planned sales 180 200 160 Total units needed 540 420 360 Planned beginning inventory 380 360 220 Production requirements |160 60 140 (b) Prepare a forecast of the units of direct materials required for February, March and April. (6 marks) August September October Desired ending inventory" 480 180 420 Planned usage" 960 360 840 Total units needed 1,440 540 1,260 Planned beginning inventory 600 480 180 Production requirements 840 60 1,080 Current production * 6 units direct materials * 0.5 to reflect 6 direct materials units per product, and half of this month's production for ending inventory balance. Current production x 6 Prior month's production x 6 x .5; July production was change in finished goods inventory plus July sales, or (180 + 200) - (80 + 180) + 80 = 200 units. (c) Prepare a direct labour hours budget for February, March and April. (1 mark) August September October Labour hours needed" 1,760 660 1,540 Current production * 11 (d) Assuming all products are cash sales in the month sold, and that all variable expenses relate to direct materials only which are also paid for in the month of production, what implications can you draw for cash disbursements and receipts for the month of