The sales director of a manufacturing company reports that he expects to sell 54,000 units of a certain product in the next year.
The production manager consults the store-keeper and casts his figures as follows:
Two types of raw materials, P and Q, are required for manufacturing the product. Each unit of the product requires two units of P and three units of Q. The estimated stocks at the commencement of the next year are:
Finished Products—10,000 units; Raw Material P—12,000 units; Raw Material Q—15,000 units.
The desirable Closing Stocks at the end of the next year are:
Finished products—14,000 units; Raw Material P—13,000 units; Raw Material Q—16,000 units.
Draw up a material purchase Budget for the next year.