VIC Lock manufactures two products, Residential and Commercial Locks. It is located in Victoria and sells its products only in Australian. Mary has been hired as a recent Swinburne University graduate to assist Grainne, the Factory Manager, to analyse sales data and prepare the next year budget. Grainne, asked Mary to analyse sales data for 2019 and summary report. As 2020 has been an odd year due to the Covid-19 pandemic, Grainne asked Mary to prepare the production budget for 2021 based on 2019 sales data. She expects that 2021 will be a relatively normal year as Australia has been successful in controlling Covid-19 pandemic. However, she expects a considerable decrease in the commercial market especially in Victoria and New South Wales.

Grainne provided Mary with the following sales forecasts for 2021:

State

Sales forecast for 2021

Residential Lock

Commercial Lock

Victoria

5% increase from 2019

25% decrease from 2019

New South Wales

15% increase from 2019

20% decrease from 2019

Queensland

5% increase from 2019

The same as 2019

South Australia

6% decrease from 2019

3% decrease from 2019

Tasmania

4% increase from 2019

6% increase from 2019

Northern Territory

2% increase from 2019

1% increase from 2019

Western Australia

The same as 2019

The same as 2019

It is expected that selling prices in 2021 will remain the same as 2019.

Grainne also compiled the following data for 2021 annual budget:

Use of direct material:

Amount used per unit

Direct material

Residential Lock

Commercial Lock

Knob Set

1 unit

2 unit

Faceplate

1 unit

1 unit

Cylinder

-

1 unit

Brass

0.1 Kg

0.3 Kg

Raw material prices and inventory levels:

Raw material

Anticipated purchase price

Expected inventories 1 January

Desired inventories 31 December

Knob Set

$5

10,000 units

5,000 units

Faceplate

$5

1,000 units

2,000 units

Cylinder

$20

6,000 units

10,000 units

Brass

$2

500 Kg

1000 Kg

Direct labour requirements and rates:

Product

Hours per unit

Rate per hour

Residential Lock

2

$20

Commercial Lock

3

$30

Finished goods inventories (in units):

Product

Expected 1 January

Desired 31 December

Residential Lock

10,000

20,000

Commercial Lock

5,000

10,000

Please answer the following questions:

1.Interpret the results of your sales analysis for 2019 including monthly trend for each product and state

2. Prepare sales budget (in units and dollars) (Round up your final result):

3.Prepare production budget (in units):

4.Prepare direct material purchases budget (in quantities):

5.Prepare direct material purchases budget (in dollars):

6.Prepare direct labour budget (in hours and dollars):

7.If VIC Lock aims to achieve its target sales for 2019 in 2021, what will be the direct labour budget (in dollars) for 2021 assuming the same sales mix as 2019:

8. To achieve a target direct labour budget of $3,800,000, what should be the labour rate for the Commercial Locks if the direct labour rare for the Residential Locks cannot be changed?