The Ink Limited produces two products, Valle and Ceres. The following sales forecast for 2022 was decided on by the budget committee and presented to you the management accountant.

Sales forecast

Details	Valle/units	Ceres/units
December 2021	5,800	3,500
January 2022	5,500	4,000
February 2022	6,400	4,800
March 2022	5,000	5,200
April 2022	4,900	5,400
May 2022	6,200	4,500

Notes:

(i) During 2022 the company sold one unit of Valle for $900 while one unit of Ceres was sold for $620.

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

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

(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 thirty (30%) of the sales for the next month.

Required:

For the period, January 2022 to April 2022 do the following:

The companys sales budget for both products (6 marks)

The production budget for both products. (10 marks)

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

Outline two advantages that can be derived from proper budgeting practices within an organization. (2 marks)