White Corporation\'s budget calls for the following sales for next year: Quarter

Question

White Corporation's budget calls for the following sales for next year:

Quarter 1 96,500 units Quarter 2 82,000 units Quarter 3 67,700 units Quarter 4 98,800

Each unit of the product requires 3 pounds of direct materials. The company's policy is to begin each quarter with an inventory of product equal to 5% of that quater's estimated sales requirements and an inventory of direct materials equal to 20% of that quarter's estimated direct materials requirements for production.

1. Determine the production budget for the second quarter:

Budgeted sales_____________

Desired ending inventory________________

Total units needed ___________________

Beginning inventory ____________________

Total units to produce__________________

2. Determine the materials purchases budget for the second quater:

Budgeted production _________________

Direct materials (lbs.) per unit produced ____________________

Direct materials needed in production

Desired ending inventory of direct materials (lbs.)_____________

Total direct materials needed ________________________

Beginning inventory of direct materials ___________________

Budgeted purchases of direct materials (lbs.) _______________

Explanation / Answer

1 2nd quarter 3rd quarter Budgeted sales 82000 67700 Desired ending inventory 3385 4940 Total units needed 85385 72640 Beginning inventory 4100 3385 Total units to produce 81285 69255 2 Budgeted production 81285 Direct materials (lbs.) per unit produced 3 Direct materials needed in production 243855 Desired ending inventory of direct materials (lbs.) 41553 Total direct materials needed 285408 Beginning inventory of direct materials 48771 Budgeted purchases of direct materials (lbs.) 236637

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