Sad Open Flame Candle Co. decided on the following sales forecast for the months indicated. The company
Question:
Sadѐ Open Flame Candle Co. decided on the following sales forecast for the months indicated. The company produces two products Body Butter and Shower Steamer
| Details | Body Butter | Shower Steamer |
| July | 3000 units | 4000 units |
| August | 3500 units | 4500 units |
| September | 4000 units | 3800 units |
| October | 2800 units | 3200 units |
| November | 3400 units | 3000 units |
| December | 4200 units | 4600 units |
Notes:
(i) To make one unit of Body Butter three (3) units of raw material Z508 is used. One unit of Z508 costs $70. Shower Steamers uses two (2) units of raw material K500 which costs $60 each.
(ii) The company has decided that raw material stocks at the end of each month should be held equivalent to fifteen percent (15%) of the budgeted sales for the month in question.
(iii) During the year, the company sold one unit of Body Butter for $320, while one unit of Shower Steamers was sold for $300.
(iv) The decision was made that at the end of each month there should be in store sufficient finished goods stock to meet thirty percent (30%) of the sales for the next month.
For the period, August to November do the following:
a) The sales budget for both products.
b) The production budget for both products.
c) The direct raw materials usage budget for both products.
d) The direct raw materials purchase budget for both products.
e) Briefly explain, using an example what is meant by a “limiting budget factor”.
Expert Answer:
Question a Sales budget for both products for the period of August to November August B... View the full answer
