2. (16 points) Fine Furniture makes dining room chairs. You have been asked to p

Question

2. (16 points) Fine Furniture makes dining room chairs. You have been asked to prepare some factory budgets for them for 2016. Your boss given you the following data regarding budgeted sales, in units: Jan Feb Mar Mav Sales (in units) 15,000 20,000 22,000 25,000 20,000 15,000 You've gathered the following additional information: Each unit of product requires 2 board feet of lumber. The cost of lumber is $2 per board foot. At December 31, 2015, finished goods inventory will consist of 3,000 completed chairs. At December 31, 2015, there will be 9,600 board feet of lumber on hand. There will be no work in process at 12/31/15. The company policy is to maintain 20% of the next month's needs for finished goods (chairs) v Given the high demand for lumber, the company policy is to maintain 30% of the next month's needs for raw material (lumber). a. Prepare a production budget showing the quantity of chairs to be produced in January, February and March of 2016. b. a direct budget showing the lumber to be purchased in January and February and in total for the two months ending 2/28/16. PRODUCTION BUDGET JANUARY FEBRUARY MARCH DIRECT MATERIALS BUDGET FOR TWO FEBRUARY MONTHS 2128 JANUARY

Explanation / Answer

Production Budget:

January Feb. March Sales 15,000 20,000 22,000 + Closing Inventory(20% of Next Month Demand) 4,000 4,400 5,000 Total Units Required 19,000 24,400 27,000 - Opening Inventory 3,000 4,000 4,400 Production required in the Month 16,000 20,400 22,600 DIRECT MATERIAL BUDGET January Feb. For the two Months Required for the Production in the Month 32,000 40,800 72,800 + Closing Inventory Required (30%) 12,240 13,560 25,800 Total 44,240 54,360 98,600 Less: Opening Inventory 9,600 12,240 21,840 Direct Material Required to be Purchased 34,640 42,120 76,760 Cost of Material 69,280 84,240 153,520

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.