Question

Optima Sdn Bhd (OSB) manufactures and sells product X. In the first four months of the coming year, OSB expects the following unit sales: January 41,000 February 38,000 March 50,000 April 51,000 The selling price is RM35 per unit. OSB’s policy is to have 25% of next month’s sales in ending inventory. The beginning inventory of product X is 6,700 units. Each product X require 5.5 kg of material P1 and 1 kg of materials P2. Company policy requires that ending inventories of materials for each month to be 15% of the next month’s production needs. That policy was met for the ending inventory of December in the prior year. The cost of material for 1 kg of P1 is RM2.00. The cost of material for one kg of P2 is RM1.60. Each unit of product X takes 0.3 direct labour hours. The rate per hour is RM18 per hour. Prepare separate direct materials purchase budgets for P1 and P2 for the month of January and February

          Optima Sdn Bhd (OSB) manufactures and sells product X. In the first four months of the coming year, OSB expects the following unit sales:
January  41,000
February  38,000
March  50,000
April  51,000
The selling price is RM35 per unit. OSB’s policy is to have 25% of next month’s sales in ending inventory. The beginning inventory of product X is 6,700 units. 
Each product X require 5.5 kg of material P1 and 1 kg of materials P2. Company policy requires that ending inventories of materials for each month to be 15% of the next month’s production needs. That policy was met for the ending inventory of December in the prior year. The cost of material for 1 kg of P1 is RM2.00. The cost of material for one kg of P2 is RM1.60. Each unit of product X takes 0.3 direct labour hours. The rate per hour is RM18 per hour.
Prepare separate direct materials purchase budgets for P1 and P2 for the month of January and February

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