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Question 2 20 marks A sales budget is given below for one of the products...

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Question 2 20 marks A sales budget is given below for one of the products manufactured by the Real Estate Company: January February March April May June 21,000 units 36,000 units 61,000 units 41,000 units 31,000 units 25,000 units The inventory of finished goods at the end of each month should equal 20% of the next month's sales. However, on December 31 the finished goods inventory totalled only 4,000 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by the suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year. Required (show your calculations): a. Prepare a budget showing the required production each month for January, February, March, and April (8 marks) b. Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March (8 marks) C. From a parent company's viewpoint, there is no significant difference between the budgeting of a local subsidiary and a foreign subsidiary. Do you agree with this statement? Explain your answers. (4 marks)

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