You should attempt to answer this question yourself before looking up the suggested answer, which appears on pages 856-7. If any part of your answer is incorrect, check back carefully to make sure you understand where you went wrong.

R Limited manufactures three products: A, B and C.

You are required:

{a) Using the information given below, to prepare budgets for the month of January for

(i) sales in quantity and value, including total value;

(ii) production quantities;

(iii) material usage in quantities;

(iv) material purchases in quantity and value, including total value ;

(Note that particular attention should be paid to your layout of the budgets.)

(b) to explain the term 'principal budget factor' and state what it was assumed to be in (a)

Sales: Product Quantity Price each (units) () A 1000 B 2000 C 1500 0240 100 120 140