(a) The following projected information for the year 2011 is provided below:
Projected sales 80,000 units
Selling price per unit $12
Inventory at 31 December 2010 6,000 units
Inventory at 31 December 2011 9,000 units
Prepare a production budget to show how many units the company will have to produce in the year 2011.
(b) Refer to your answer to part (a). Assume now that for each unit the company produces, they will require 3kg of raw material. How much raw material will the company need to buy for the production units budgeted in part (a)?
(c) How will your answer to part (b) change if the company has 2,500kg of raw material at the beginning of the year and expects to have 4,500kg or raw material at the end of the year?
(d) List and briefly discuss four (4) benefits of using budgets in decision making.