Master Gates Ltd is preparing its quarterly functional budgets for the year ending 30 June 2011, using a four- monthly accounting period to take account of the seasonal nature of its sales. The company manufactures and sells one product. The forecast sales for the year are:

Quarter 1 9, 000 units

Quarter 2 7, 000 units

Quarter 3 8, 000 units

It is company policy to carry a finished stock of 10% of the next four-month periods sales. The standard selling price of $80 per unit

Sales for Quarter 4 of 2011 are expected to be 10, 000 units.

The standard cost of one unit of finished product is:

Material A 4 kg at $5 per kg

Department X 3 hours at $4 per hour

Department Y 5 hours at $5 per hour.

No stocks of components are held.

Required:

Prepare the following budgets for each of the four-month (quarter 1, 2, 3, and in total where necessary) period for the year ending 30 June 2011.

1. Sales budget (in $s). (1 marks)
2. Production budget (in units). (6 marks)
3. Material usage budget (in $s and number of components). (6 marks)
4. Labour utilization budget for each of the departments X and Y (in hours). (6 marks)
5. Labour cost budget for each department (in $s) (6 marks)