QUESTION TWO

A shirt manufacturing company expects to be able to sell $15,000$ shirts in April $2022.$ Sales volumes are expected to grow at $5\%$ per month cumulatively thereafter throughout $2022.$ The following additional information is available.

The company intends to carry a stock of finished garments sufficient to meet $40\%$ of the next month's sales.

The company intends to carry sufficient raw material stock to meet the following month's production.

$3.$Estimated costs and revenues per shirt are as follows:

Per shirt

$K$

Sales price

$30$

Raw materials

Fabric at $K12$ per square metre

Dyes and cotton

Direct labour at $K8$ per hour

Fixed overheads at $K4$ per hour

Profit

$q,$

K$9$

Required:

Prepare the following budgets on a monthly basis for each of the three months July to September $2022$:

$($i$)$ A sales budget showing sales units and sales revenue ;

$($ii$)$ A production budget $($in units$)$ ;

$($iii$)$ A fabric purchases budget $($in square metres$).$

$($iv$)$ Labour hours and cost budget