Fuqua Company\'s sales budget projects unit sales of part 198Z of 10,100 units i

Question

Fuqua Company's sales budget projects unit sales of part 198Z of 10,100 units in January, 12,400 units in February, and 13,600 units in March. Each unit of part 198Z requires 2 pounds of materials, which cost $3 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2016 Prepare a production budget for January and February 2017. FUQUA COMPANY Production Budget January February isi Prepare a direct materials budget for January 2017. FUQUA COMPANY Direct Materials Budget January

Explanation / Answer

a) Production budget :

Direct material budget :

January February Sales units 10100 12400 Add: Desired ending inventory 2480 2720 Total needs 12580 15120 Less: Beginning inventory (2020) (2480) Production units 10560 12640

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