Question 2: Budgeting (13 marks) The Bookshelf Building Business Limited (BBB) design and build four types of bookshelf. These products are a budget model (budget), a standard model (standard), a large standard model (large standard) and a quality model (quality). The products are constructed based on a largely standardised set of materials and components bein assembled by a skilled workforce. The financial controller of BBB has provided you with the following information to enable you to prepare the annual budgets for the year ending 30 June 2016. Once prepared, these budgets will be passed through to the sales and production teams for their approval and ultimately will be used for target setting purposes 1. The budgeted sales prices and predicted sales volumes are: The production director has formally requested that the budgets for the year ended 30 June 2016 be prepared on a more realistic basis than historically has been the case. The financial controller has therefore asked that the levels of finished goods inventory are raised by 20% from their closing position as at 30 June 2015 . 3. Each product requires a number of standard components/materials. The following analysis shows the labour usage and the materials usage per product. In addition, the large standard and quality each require one small CD storage unit (cost S8) which the Budget and Standard do not have. 4. The standard unit production times are: 5. BBB expects to have the following materials in inventories as at 30 June 2015 : Quantity (No.) AI 12,000 D2 14,000 CD units 500 The purchasing director predicts materials price rises in late 2016/2017 and feels a natural hedge against these is to buy extra components/materials during the year ending 30 June 2016. The current proposal is to carry forward 25% more of each component/material at 30 June 2016 than is budgeted to be brought forward. Required: Based on the information provided above, prepare for BBB the following: (a) Annual budgets for: (i) sales (in quantity and value) (ii) production quantities; (iii) materials usage ( kg ) and materials purchases (in kg and S ); (iv) direct labour utilisation and cost (in \$)