ltuna Products has prepared the following units sales forecast for 2011: Sales 3
ID: 2348907 • Letter: L
Question
ltuna Products has prepared the following units sales forecast for 2011:Sales 380,000 units, estimated ending finished goods inventories for December 31, 2011 are 20,000 units and beginning ending fnished goods at Jan 1, 2011 are 8,000 units.
In order to manufacture a unit, Altuna Products uses 5 pounds of Material A and three gallons of material B. The company has no WIP and projects direct materials ending inventories at 12/31/2011 as follows:
Material A 300,000 pounds
Materila B 200,000 gallons
Beg. raw materials inv were 200,000 pounds of Material A and 140,000 gallons of material B.
a) Pepare a Production Budget
b) Prepare a Raw materials purchases budget.
Explanation / Answer
(a) Ituna Products Production Budget 2011 Expected sales units 380000 Add: Desired ending finished goods units 20,000 Total required units 400,000 Less: Beginning finished goods units 8000 Required production units 392,000 ------------------------------------------------------------------------------------------------------- (b) Ituna Products Raw Material Purchase Budget Material A Material B Units to be produced 392,000 392,000 Direct Material per unit 5 3 Total required units 1,960,000 1,176,000 Add: Desired ending direct material 300,000 200,000 Total material required 2,260,000 1,376,000 Less: Beginning direct materials 200,000 140,000 Direct Material purchase 2,060,000 1,236,000
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