On January 1, 2017, the Hardin Company budget committee has reached agreement on

Question

On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. Prepare a production budget by quarters for the 6-month period ended June 30, 2017.

Explanation / Answer

HARDIN COMPANY Production Budget for the 6-month period ended June 30, 2017 Quarter 1 2 Forecasted Sales Units          6,000         6,600 + Ending Finished goods inventory units          1,650         1,850 = Total Production required          7,650         8,450 -Beginning Finished goods inventory units (1,500)      (1,650) = Units to be manufactured          6,150 6,800 Raw Material required for Finished units ( per unit) 3 3 Total raw material required ( in units ) 18,450      20,400 Cost per pound per unit 4 4 Total raw material required ( in pounds) 73,800      81,600

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