Sheds Ahead Ltd produces outdoor sheds for domestic use. The manager in charge of production has been asked to prepare a production budget, a direct materials budget and a direct labour budget for part of 2017 based on the company’s sales forecast.

The materials and labour requirements per shed are:

		Quantity		Cost
Sheet metal Enamel paint Cutting and welding labour Assembly		25 square metres 10 litre 3 hours 1 hour		$24 per square metre 12 per litre 18 per hour 21 per hour

The business requires a finished goods ending inventory for each quarter that equals 30% 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 2017 are forecast as:

Sheet metal Enamel paint Sheds

6200 square metres 1200 litres 240 units

The forecast quarterly sales in units are:

First quarter 2017 Second quarter 2017 Third quarter 2017 Fourth quarter 2017

8400 6200 8800 14200

Required

A. Prepare a quarterly production, in units only, for the first three quarters of 2017.

B. Prepare a direct materials budget for the first two quarters of 2017 in both units and dollars.

C. Prepare a direct labour budget for the first two quarters of 2017.