QUESTION 2 Meranti Bhd manufactures wooden furniture. The Production Manager of tables and chairs is currently preparing the functional budgets for the forthcoming months. The monthly sales forecast of tables and chairs are: Month June July August September October Sets 2,000 5,000 3,000 2,000 4,000 The direct materials and labour requirements per set of tables and chairs are: Item Timber Paint Machining labour Finishing labour Quantity 1.5 cubic metres 2 litres 4 hours 6 hours Cost (RM) 100 per cubic metres 3 per litre 6 per hour 9 per hour The company requires a finished goods closing stock for each month that equals 30% of the expected sales of the next month. The closing stock of direct materials each month should equal 20% of the next month's direct materials requirement. The closing stock balances on 31 May 2005 are forecasted as follows: Timber 1,000 cubic metres Paint 1,200 litres Finished Goods 900 sets Required: a. b. Prepare the following functional budgets for the months June, July and August 2005: Production budget (units) (4 marks) Direct materials purchases budgets (unit and cost) (13.5 marks) Direct labour budget (7.5 marks) C