At the beginning of October, Comfy Cushions had 1,800 cushions and 11,500 pounds

Question

At the beginning of October, Comfy Cushions had 1,800 cushions and 11,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required
a. Prepare a production budget for October and November.
Do not use a negative sign with your answers.

b. Prepare a purchases budget in units and dollars for October.
Do not use a negative sign with your answers.

Explanation / Answer

Comfy Cushions Production Budget For the Months of October and November October November December Unit Sales 9000 11000 14000 Desired ending inventory 2200 2800 Finished goods requirements 11200 13800 Less beginning inventory 1800 2200 Production requirements 9400 11600 Comfy Cushions Purchases Budget For the Month of October October November Production requirements 47000 58000 Desired ending inventory 14500 Raw materials requirements 61500 Less beginning inventory 11500 Purchase requirements (units) 50000 Purchase requirements (in dollars) 45000

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