Transcribed Image Text
In: AccountingQuestion 2: Budget (20 marks in total) Lulu Company has thefollowing budgeted sales for the...Question 2: Budget (20 marks in total) Lulu Company has thefollowing budgeted sales for the next six-month period: Month UnitSales January 48,000 February 84,000 March 60,000 April 72,000 May48,000 June 80,000 There were 69,000 units of finished goods ininventory at the beginning of January. Plans are to have aninventory of finished products that equals 100% of the followingmonth sales plus 25% of the second month sales. Two kilograms ofraw materials are required for each unit produced. From January,each kilogram of material costs $20 (up from $18 in December lastyear). Inventory levels for materials are equal to 40% of the needsfor the next month. Lulu Company uses a FIFO inventory method forboth raw material and finished goods. Required: 2a. Prepare aproduction budgets in units for January and February 2b. Prepare amaterials usage budget in kilograms and dollars for January 2c.Prepare a materials purchases budget in kilograms and dollars forJanuary 2d. List and explain some benefits to an organisation ofpreparing an operating budget, use the textbook and other relevantsources to support your answer