1. **Problem Statement:** Calculate the budgeted production and trading cost of goods sold for Narnia Bhd for the months January to May 2024 using the given sales forecast and inventory information. 2. **Formulas and Rules:** - Budgeted Production for a month = Sales forecast for that month + Desired ending inventory for that month - Beginning inventory for that month - Desired ending inventory for a month = Next month's sales forecast (for products A and B only) - Trading Cost of Goods Sold (COGS) = 40% of Trading Sales 3. **Step-by-step Calculation:** **For Products A and B:** - Calculate beginning inventory for January (given or assumed from previous data). - Calculate ending inventory for each month as next month's sales forecast. - Use the formula: $$\text{Production}_m = \text{Sales}_m + \text{Ending Inventory}_m - \text{Beginning Inventory}_m$$ **For Trading Goods:** - Trading COGS for each month = 40% \times Trading Sales for that month 4. **Example Calculation for Product A in January:** - Sales in January = 3000 units - Ending inventory for January = February sales = 4000 units - Beginning inventory for January = assumed or given (not provided, assume 0 for calculation) - Production in January = 3000 + 4000 - 0 = 7000 units 5. **Trading Goods COGS for January:** - Trading Sales = 150000 - Trading COGS = 0.40 \times 150000 = 60000 6. **Repeat the above steps for each product and month to complete the budget.** This approach ensures inventory levels meet next month's sales requirements and trading costs are accurately budgeted.