Company is preparing its budget for 4th quarter of 2013. Ending finished goods i

Question

Company is preparing its budget for 4th quarter of 2013. Ending finished goods inventory is required at 20% of current month sales. On October 1, the finished goods inventory had 20,000 units.Each unit needs 2 lbs of raw material. Ending Raw material Inventory is required at 30% of the material needed for same month production. October 1, the beginning Raw material inventory had 66,000 lbs. Budgeted sales are: October November DecemberUnits sales 120,000 150,000 180,000 a. What is the budgeted production level for each month? b. What is the budgeted raw material purchase for each month?

Explanation / Answer

a) Production Budget October November December Budgeted Sales 120000 150000 180000 Add: Ending Finished Goods Inventory 24000 30000 36000 Less: Beginning Finished Goods Inventory 20000 24000 30000 Production Required 124000 156000 186000 b) Purchase Budget October November December Production Required 124000 156000 186000 Raw Material Required for production 248000 312000 372000 Add: Ending Raw Material Inventory 74400 93600 111600 Less: Beginning Raw Material Inventory 66000 74400 93600 Purchase of Raw Material required 256400 331200 390000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.