Joel Brown & Associates produces two products, Vita120 and Vita220. The document provides the sales forecast for 2018 and notes regarding stock levels, 2019 budgeted sales, and 2016 sales. It requires preparing the sales budget, production budget, direct raw material budget for 2018, and explaining limiting budget factors and how they could influence achieving profit objectives for 2018. It also asks why management accounting information must consider the future and economic reality.

1. Joel Brown & Associates Limited produces and sells two products, Vita120 and Vita220. The
following table provides information on the sales forecast for 2018: Notes: (i) It is the companys
policy to have stock on hand at the end of each quarter equaling to 10% of budgeted sales for the
next quarter. (ii) Budgeted sales for the first quarter of 2019 were: 7,000 units for Vita120 and
5,800 units for Vita220. (iii) During 2016, the company sold one unit of Vita120
Required:
Prepare the sales budget for 2018. (6 marks)
Prepare the production budget for 2018 (10 marks)
Prepare the direct raw material budget for 2018 (5 marks)
Explain what is meant by a limiting budget factor. (2 marks)
Describe two limiting factors that could influence the achievement of Joel Brown and Associates
profit objectives for 2018. (4 marks)
Why must the information produced by the management accountant be concerned with the future
as well as to reflect economic reality?