Question 5

R Ltd. manufactures three products, A, B and C. The following information is given below.

Sales Forecast

Product Quantity Price Per Unit

A 1000 Rs.100

B 2000 Rs.120

C 1500 Rs.140

Materials Used in Companys Products Are:

Material M1 Rs.4 per unit

Quantities used in Product

Product M1 M2 M3

A 4 2

B 3 3 2

C 2 1 1

Finished Stocks:

Product A B C

Opening Inventory- units 1000 1500 500

Closing Inventory- units 1100 1650 550

Material Stocks:

Particulars M1 M2 M3

Opening Stock [Units] 26000 20000 12000

Closing Stock [Units] 31200 24000 14400

Required:

(a) The materials usage budget for January 2008. (4 marks)

(b) The materials purchases budget for January 2008. (14 marks)

(c) Define the term limiting budget factor. (1 mark)