Exercise 21-8 (Part Level Submission) Fuqua Company’s sales budget projects unit
ID: 2524861 • Letter: E
Question
Exercise 21-8 (Part Level Submission)
Fuqua Company’s sales budget projects unit sales of part 198Z of 11,000 units in January, 12,600 units in February, and 14,000 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $3 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 production budget for January and February 2017
Exercise 21-8 (Part Level Submission)
Fuqua Company’s sales budget projects unit sales of part 198Z of 11,000 units in January, 12,600 units in February, and 14,000 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $3 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.
Explanation / Answer
PRODUCTION BUDGET Jan Feb March Budgeted Sales Units 11,000 12,600 14,000 Add: Desired Ending Finished inventory 2,520 2,800 Total Needs 13,520 15,400 Less: Beginning Finished Inventory 2,200 2,520 Required Production in units 11,320 12,880
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