The Industrial Corporation of Jamaica produces two products, AK and BK. The following sales forecast for 2016 was decided on by the budget committee and presented to you the management accountant.

Sales forecast

Details	AK/units	BK/units
December 2015	6,000	3,700
January 2016	5,500	4,000
February 2016	6,200	4,500
March 2016	5,000	5,200
April 2016	4,900	5,400
May 2016	6,400	4,800

Notes:

(i) During 2016 the company sold one unit of AK for $1,200 while one unit of BK was

sold for $1,400.

(ii) To make one unit of AK four units of raw material zinc is used, while two units of

raw material aluminum is used to produce one unit of BK.

(iii) Raw materials stock in units at the end of each month is to be held at a level equal to twenty percent (20%) of the forecasted sales for the next month.

(iv) It was decided by management that at the end of each month there should be enough finished goods stock on hand to meet twenty (20%) of the sales for the next month.

(v) During 2016, direct raw material charge per unit was budgeted at ten percent (10%) of the unit selling price of the finished products.

Required:

For the period, January 2016 to April 2016 do the following:

(a) The companys sales budget. (5 marks)

(b) The production budget for both products. (20 marks)

(c) The direct raw materials usage budget for both products. (10 marks)

(d) Outline five advantages that can be derived from proper budgeting practices within an organization.