38 FUNCTIONAL BUDGETS Question 2 CLtd makes two products, Alpha and Beta. The following data is relevant for year 3. Material prices: Material M $ 2 per unit Material N $ 3 per unit Direct labour is paid $10 per hour. Each unit of finished product requires: Material M Material N Direct labour Alpha 12 units 6 units 7 hours Beta 12 units 8 units 10 hours The sales director has forecast that sales of Alpha and Beta will be 5,000 and 1,000 unit respectively, during year 3. She estimates that the inventory at 1 January, year 3, will be 100 units of Alpha and 200 units of Beta. At the end of year 3 she requires the inventory level to be 150 units of each product. The production director estimates that the raw material inventories on 1 January, year 3, will be 3,000 units of material M and 4,000 units of material N. At the end of year 3 the inventories of these raw materials are to be: M: 4,000 units N: 2,000 units Required: You are required to prepare following budgets for the year 3 1. Sales budget in units 2. Production budget in units 3. Material usage budget in units 4. Material purchase budget in units and in value ($) 5. Direct labour budget in hours and in value ($)