Fuqua Company’s sales budget projects unit sales of part 198Z of 10,700 units in

Question

Fuqua Company’s sales budget projects unit sales of part 198Z of 10,700 units in January, 12,200 units in February, and 13,000 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. Prepare a production budget for January and February 2017. FUQUA COMPANY Production Budget January February : : LINK TO TEXT Prepare a direct materials budget for January 2017. FUQUA COMPANY Direct Materials Budget January : : $ $

Explanation / Answer

FUQUA COMPANY

Production Budget

FUQUA COMPANY

Direct Materials Budget

January February Sales in units 10,700 12,200 Ending inventory 2,440 (12,200*20%) 2,660 (13,000*20%) Total needs 13,140 14,860 Beginning inventory (2,140) (10,700*20%) (2,440) (12,200*20%) Production in units 11,000 12,420

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