Gasmania Pty Ltd produces patio heaters for household use. The following information has been gathered so that a production budget, a direct materials budget and a direct labour budget for part of 2020 can be prepared.

The materials and labour requirements per tank are as follows.

Management prefers a finished goods ending inventory for each quarter that equals 25% of expected sales for the next quarter. Also, the ending inventory balance of direct materials should equal 25% of the next quarter’s production requirements. The inventory balances on 1 January 2020 are forecast as shown.

Required

(a) Prepare a quarterly production budget, in units only, for the March, June and September quarters of 2020.

(b) Prepare a direct materials budget for the March and June quarters of 2020 in both units and dollars (round to nearest unit).

(c) Prepare a direct labour budget for the March and June quarters of 2020.

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Stainless steel Gas cylinder Moulding and welding Powder coating Quantity 5 kilograms 1 2 hours 0.5 hour Cost $12 per kilogram $18 $22 per hour $18 per hour