Question $5$ Moreso Products Ltd is preparing its annual budgets for the year ending $31$st December $2018.$ The company manufactures one product which currently sells for $60$ per unit. The Sales Director believes that the price can be increased by $10\%$ for the rest of the year with effect from $1$st July $2018.$ The sales volumes for each quarter are expected to be as follows: Sales Volume $($units$)$ Quarter $16000$ Quarter $28000$ Quarter $310000$ Quarter

Pl$48000$ Sales for the first quarter of the year $2019$ are estimated to be $6000$ units. Each unit of the finished product requires $4$ kgs of material. The current price per kilogram of material is $6.$ The price however is expected to increase as of $1$st April $2018$ by $10\%.$ Assembly of each unit requires $5$ hours of direct labour. Labour is currently paid a rate of $7$ per hour although the personnel department anticipate a wage rise of $10\%$ to take effect from $1$st July $2018.$ Stock on $31$st December $2017$ is expected to be $4000$ units. Closing stock at the end of each quarter is expected to be $25\%$ of next quarter$$s sales. Required: $1)$ Prepare the following budgets for the company: a$)$ sales budget $($in $$s$)$ b$)$ production budget $($in units$)$ c$)$ material usage budget $($in kgs$)$ d$)$ material price budget $($in $$s$)$ e$)$ labour usage budget $($in hours$)$ f$)$ labour price budget $($in $$s$)(3$ marks for each budget, total of $18$ marks$)2)$ Discuss clearly the importance of budgeting, by addressing the functions of budgets in an organisation. $(7$ marks$)$

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