Fuqua Company’s sales budget projects unit sales of part 198Z of 10,800 units in

Question

Fuqua Company’s sales budget projects unit sales of part 198Z of 10,800 units in January, 12,700 units in February, and 13,200 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2016.

A: Prepare a projected budget for Jan and Feb 2017

B: Prepare a direct material budget for Jan 2017

Explanation / Answer

Solution:

Production Budget:

Direct Materials Budget:

Fuqua Company Production Budget January February Expected Unit Sales      10,800      12,700 Add: Desired Ending Finished Goods Inventory (12,700 * 20%) & (13,200 * 20%)        2,540        2,640 Total Required Units      13,340      15,340 Less: Beginning Finished Goods Inventory (10,800 * 20%) & (12,700 * 20%)        2,160        2,540 Required Production Units      11,180      12,800

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

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