On January l, 2014, the Hardir Company budge: committee has reached agreement on

Question

On January l, 2014, the Hardir Company budge: committee has reached agreement on the following data for the 6 months ending June 30, 2014. The ending raw materials and finished goods inventories at December 31, 2013, follow the same percentage relationships to production and sales that occur in 2014. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost S4 per pound. Prepare a production budget by quarters for the 6-month period ended June 30, 2014.

Explanation / Answer

Production Budget:

Quarter 1 Quarter 2 Year Sales 5,000 6,000 Add: Desired Ending Finished Goods Inventory 1,500 1,750 Total Requirement 6,500 7,750 Less: Opening Inventory 1,250 1,500 Production Required 5,250 6,250

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