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Written Problems 21. (10 points) AJJ Co. makes bird feeders and expects sales un

ID: 2581020 • Letter: W

Question

Written Problems 21. (10 points) AJJ Co. makes bird feeders and expects sales units for the first three months of 2018 to be as follows Jan Eeb Mar 320 260 380 Total Sales quantity (units) The December 31, 2017, inventories were as follows Finished goods inventory Raw materials inventory 60 bird feeders 80 pounds Each bird feeder requires two pounds of raw material, which costs $1.50 per pound The company's management desires to have the following inventory levels (in units) at the end ot each respective month: Jan Feb Mar Finished goods inventory units 52 76 80 Raw materials inventory pounds 142 192 200 a. Prepare a production budget by month for the first three months of 2018. b. Prepare a direct material purchases budget by month for the first three months of 2018 Jan Feb Mar a) Production Budget Budgeted production units (b) Direct Materials Purchases Budget tal budgeted direct material purchases in dollars

Explanation / Answer

Jan Feb Mar Total sales Unit          320       260          380 (a) Production budget a Sales Units          320       260          380 b Closing Units            52          76            80 c Opening units (60)       (52)          (76) d Production (a+b-c)          312       284          384 Budgeted production units          312       284          384 (b) Direct Material Purchase Budget e Production          312       284          384 f No of raw material per unit              2            2              2 g Total raw material required (e*f)          624       568          768 h Material consumed (g)          624       568          768 i Closing stock of raw material          142       192          200 j Opening stock of raw material (80)     (142)       (192) k Purchased of raw material (h+i-j)          686       618          776 l Cost of raw material $    1.50 $ 1.50 $    1.50 m Total Purchase $ 1,029 $   927 $ 1,164