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QUESTION 5 Total 10 marks Kingston Ltd manufactures and sells backpacks. Information on the backpacks for 2014 is as follows: (1) Sales price of a

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QUESTION 5 Total 10 marks Kingston Ltd manufactures and sells backpacks. Information on the backpacks for 2014 is as follows: (1) Sales price of a backpack is $160. (2) Product costs per unit: Direct material (2 metres @ $25) $50.00 Direct labour (1 hour @ $20 .00) $20.00 Overheads $20.00 $90.00 (3) Budgeted sales for the rst six months are: Month Number of backpacks January 9,000 February 8,000 March 6,000 April 10,000 May 8,000 June 10,000 (4) Inventory policy and beginning inventory balances: 135p; Quantities Finished goods 20 % of next month's backpack sales are required. Balance on 1 January 2014 was 1,000 backpacks costing $40,000. Direct materials 40% of materials for next month's backpack sales are required. Balance on 1 January 2014 is 4,000 metres. Required: a) Prepare production budgets in units for January, February and March. (4 marks) b) Prepare a purchases budget in metres for January and February, giving total (4 marks) purchases in both metres and dollars for each month. c) Calculate the amount budgeted for cost of goods sold in January. (2 marks)

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