Sad Open Flame Candle Co. decided on the following sales forecast for the months indicated. The company produces two products Body Butter and Shower Steamers.

Sales Forecast 2016

Details

Body Butter

Shower Steamers

July

3,000 units

4,000 units

August

3,500 units

4,500 units

September

4,000 units

3,800 units

October

2,800 units

3,200 units

November

3,400 units

3,000 units

December

4,200 units

4,600 units

Notes:

(i)To make one unit of Body Butter three (3) units of raw material Z508 is used.

One unit of Z508 costs $70. Shower Steamers uses two (2) units of raw material

K500 which costs $60 each.

(ii)The company has decided that raw material stocks at the end of each month

should be held equivalent to fifteen percent (15%) of the budgeted sales for the

month in question.

(iii)During the year, the company sold one unit of Body Butter for $320, while one

unit of Shower Steamers was sold for $300.

(iv)The decision was made that at the end of each month there should be in store

sufficient finished goods stock to meet thirty percent (30%) of the sales for the

next month.

Required:

For the period, August to November do the following:

a)The sales budget for both products. (6 marks)

b)The production budget for both products. (10 marks)

c)The direct raw materials usage budget for both products. (5 marks)

d)The direct raw materials purchase budget for both products. (15 marks)

e)Briefly explain, using an example what is meant by a "limiting budget factor". (4 marks)