This scenario is related from Task 1 to Task 3

Sales for year 2021 are estimated in two steps. First step is the calculation of average sales of each month through an equation and then adjusting seasonal variation in it.

Average sales = 15000 + 2000 x

Where,

Average sales represent sales volume without any seasonal variation.

x represents growth where x = 1 for January of 2021 representing 1-time growth in sales,

x = 2 for February of 2021 representing 2-time growth in sales and so on

Then seasonal variation is adjusted in average sales to derive final sales.

JanFebMarchApril

Seasonal variation (in units)+1000-2200-800+2000

(+) sign is representing positive seasonal variation which means that sales will increase in the month

(-) sign is representing negative seasonal variation which means that sales will decrease in the month

Task 1

Sales volume of April will be

units

Production volume of each month has been correctly calculated as

MayJuneJuly

Production volume (in units)20,00019,00021,000

It is the policy of company to always carry closing stock of raw material equal to 40% consumption of next month.

Material consumption is 5 kg per unit. Process losses in material is expected to be 20%.

Task 2

Calculate CONSUMPTION budget of MAY and PURCHASE budget of JUNE(4 marks)

Consumption of material in May

kgPurchase quantity of June

kg

Purchase cost from Jan to May has been correctly calculated as follows

JanFebMarchAprilMay

Purchase cost$50,000$45,000$53,000$60,000$82,000

Opening balance of supplier is $90,000 (1/3 related to Nov, and balance related to Dec). it the policy of company to pay 40% to supplier after one month and 60% after 2 months.

Task 3

Calculate amount which company will pay to supplier in January and March (4 marks)

January

March