1. Sales Budget Johnson Inc. sells high-tech staplers. Johnson is preparing budg

Question

1. Sales Budget Johnson Inc. sells high-tech staplers. Johnson is preparing budgets for the quarter ending September 30, 2017. The sales price is $14.00 per stapler. Johnson expects the following number of units to be sold in the coming year: July August September October 10,000 25,000 15,000 12,500 Required: Prepare a sales budget for the third quarter of the coming year, showing units and sales revenue by month and in total for the quarter Check Figure: Total projected sales revenue for the quarter- $700,000 2. Johnson wants ending inventory to be 15 percent of the next month's budgeted sales in units. 4,000 units were on hand June 30. Required: Prepare a production budget for the third quarter of the year. Show the number of staplers that should be produced each month as well as for the quarter in total. Check Figure: Total budgeted product units to produce for the quarter - 47,875 3. Materials Purchases Budget: Three sheets of metal are required to produce a single stapler. Johnson wants to have materials on hand at the end of each month equal to 20 percent of the following month's production needs. The materials inventory on June 30 is 8,000 sheets of metal. October production is budgeted for 15,000 units. Required: Prepare a direct materials purchases budget for metal sheets for the quarter ending September 30. Show how many sheets of metal should be purchased each month as well as for the quarter in total. Check Figure: Total budgeted units of material to purchase for the quarter -144,62

Explanation / Answer

1 Sales Budget July August September Total October Budgeted sales in units 10000 25000 15000 50000 12500 x Price per unit $ 14.00 14.00 14.00 14.00 14.00 = Projected sales revenue 140000 350000 210000 700000 175000 2 Production Budget July August September Total Budgeted product sales in units 10000 25000 15000 50000 + Desired product units in ending inventory 3750 2250 1875 1875 = Total product units needed 13750 27250 16875 51875 - Product units in beginning inventory 4000 3750 2250 4000 = Product units to produce 9750 23500 14625 47875 3 Materials Purchases Budget July August September Total Units to produce 9750 23500 14625 47875 x Material needed per unit 3 3 3 3 = Material needed for units to produce 29250 70500 43875 143625 + Desired units of material in ending inventory 14100 8775 9000 9000 = Total units of material needed 43350 79275 52875 152625 - Units of material in beginning inventory 8000 14100 8775 8000 = Units of material to purchase 35350 65175 44100 144625

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