Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reache
ID: 2558829 • Letter: E
Question
Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017 Sales units Ending raw materials inventory: Ending finished goods inventory: Third-quarter production: First quarter 5,100; second quarter 6,000; third quarter 7,400 40% of the next quarter's production requirements 25% of the next quarter's expected sales units 7,650 units 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. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound. Prepare a production budget by quarters for the 6-month period ended June 30, 2017. HARDIN COMPANY Production Budget Quarter Six Months 5Explanation / Answer
HARDIN COMPANY
Production Budget
For the 6 month period ended June 30, 2017
Quarter 1
Quarter 2
Six Months
Quarter 3
Budgeted Sales Units
5100
6000
11100
7400
Add: Ending Finished Goods Inventory (25% of next quarter's sales unit)
1500
1850
(Quarter-3 7400*25%)
1850
Total Needs
6600
7850
12950
Less: beginning finished goods inventory (ending inventory of last quarter)
1275
1500
1275
Budgeted Production units
5325
6350
11675
HARDIN COMPANY
Direct Material Budget
For the 6 month period ended June 30, 2017
Quarter 1
Quarter 2
Six Months
Quarter 3
Units to be produced
5325
6350
11675
7650
Required Raw materials unit for one finished goods unit
4
4
4
4
Total Required Raw material for production
21300
25400
46700
30600
Add: Ending Raw Materials Inventory (40% of next quarter's production requirement)
10160
12240
12240
Total Needs
31460
37640
58940
Less: beginning raw materials inventory (ending inventory of last quarter)
8520
10160
8520
Required Raw materials purchases in units
22940
27480
50420
Unit Cost of Raw materials
$5
$5
$5
Required Cost of raw materials purchases
$114,700
$137,400
$252,100
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HARDIN COMPANY
Production Budget
For the 6 month period ended June 30, 2017
Quarter 1
Quarter 2
Six Months
Quarter 3
Budgeted Sales Units
5100
6000
11100
7400
Add: Ending Finished Goods Inventory (25% of next quarter's sales unit)
1500
1850
(Quarter-3 7400*25%)
1850
Total Needs
6600
7850
12950
Less: beginning finished goods inventory (ending inventory of last quarter)
1275
1500
1275
Budgeted Production units
5325
6350
11675
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