1. **State the problem:** Calculate the relevant budget for Narnia Bhd for the first five months of 2024, including production and inventory requirements for Product A and Product B, and trading goods costs. 2. **Given data:** - Sales forecast (units) for Product A and B from January to May. - Trading goods sales forecast in RM for January to May. - Inventory policy: keep inventory equal to next month's production and sales requirements (excluding trading inventory). - Trading cost of goods sold (COGS) is 40% of budgeted sales. - Closing inventory for trading goods for January, February, and March. 3. **Calculate production requirements for Product A and B:** Since inventory must cover next month's sales, production in month $m$ = sales in month $m$ + closing inventory for month $m-1$ - opening inventory for month $m$. 4. **Calculate closing inventory for Products A and B:** Closing inventory for month $m$ = sales forecast for month $m+1$. 5. **Calculate trading goods COGS:** COGS = 40% of sales forecast. 6. **Step-by-step calculations:** - Product A sales forecast (units): Jan=3000, Feb=4000, Mar=5000, Apr=4000, May=4000 - Product B sales forecast (units): Jan=6000, Feb=5000, Mar=5000, Apr=5000, May=5000 - Closing inventory for Product A: Jan = Feb sales = 4000 Feb = Mar sales = 5000 Mar = Apr sales = 4000 Apr = May sales = 4000 May = assumed 0 (no data) - Closing inventory for Product B: Jan = Feb sales = 5000 Feb = Mar sales = 5000 Mar = Apr sales = 5000 Apr = May sales = 5000 May = assumed 0 - Production for Product A: Jan = Jan sales + Jan closing inventory - Jan opening inventory Opening inventory for Jan assumed equal to Dec closing inventory, unknown, assume 0 for calculation. So Jan production = 3000 + 4000 - 0 = 7000 units Feb production = 4000 + 5000 - 4000 = 5000 units Mar production = 5000 + 4000 - 5000 = 4000 units Apr production = 4000 + 4000 - 4000 = 4000 units May production = 4000 + 0 - 4000 = 0 units - Production for Product B: Jan production = 6000 + 5000 - 0 = 11000 units Feb production = 5000 + 5000 - 5000 = 5000 units Mar production = 5000 + 5000 - 5000 = 5000 units Apr production = 5000 + 5000 - 5000 = 5000 units May production = 5000 + 0 - 5000 = 0 units - Trading goods sales forecast (RM): Jan=150000, Feb=200000, Mar=250000, Apr=200000, May=200000 - Trading goods COGS = 40% of sales Jan COGS = 0.4 * 150000 = 60000 Feb COGS = 0.4 * 200000 = 80000 Mar COGS = 0.4 * 250000 = 100000 Apr COGS = 0.4 * 200000 = 80000 May COGS = 0.4 * 200000 = 80000 - Closing inventory for trading goods given: Jan = 80000 Feb = 120000 Mar = 170000 7. **Summary:** - Product A production units: Jan=7000, Feb=5000, Mar=4000, Apr=4000, May=0 - Product B production units: Jan=11000, Feb=5000, Mar=5000, Apr=5000, May=0 - Trading goods COGS (RM): Jan=60000, Feb=80000, Mar=100000, Apr=80000, May=80000 - Trading goods closing inventory (RM): Jan=80000, Feb=120000, Mar=170000 This completes the relevant budget calculations for the first question.