The marketing department of Gaeber Industries has submitted the following sales
ID: 2434985 • Letter: T
Question
The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit sales 8,600 8,900 7,400 7,900
The company expects to start the first quarter with 1,550 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,610 units.
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 2,600 pounds and the beginning accounts payable for the first quarter is budgeted to be $13,800.
Each unit requires 1 pound of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 30% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.
Requirement 1:
Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.)
Gaeber Industries
Production Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted unit sales
Add desired ending inventory
Total units needed
Less beginning inventory
Required production
Requirement 2:
(a) Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)
Gaeber Industries
Direct Materials Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Production needs
Add desired ending inventory
Total needs
Less beginning inventory
Raw materials to be purchased
Cost of raw materials to be purchased $ $ $ $ $
(b) Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Round your answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Gaeber Industries
Schedule of Expected Cash Disbursements for Materials
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Accounts payable,
beginning balance $ $ $ $ $
1st Quarter purchases
2nd Quarter purchases
3rd Quarter purchases
4th Quarter purchases
Total cash disbursements $ $ $ $ $
for materials
Explanation / Answer
Requirement 1: Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.) Gaeber Industries Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted unit sales 8,600 8,900 7,400 7,900 32,800 Add desired ending inventory 1,780 1,480 1,580 1,610 1,610 Total units needed 10,380 10,380 8,980 9,510 34,410 Less beginning inventory 1,550 1,780 1,480 1,580 1,550 Required production 8,830 8,600 7,500 7,930 32,860 Requirement 2: (a) Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.) Gaeber Industries Direct Materials Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Production needs 8,830 8,600 7,500 7,930 32,860 Add desired ending inventory 2,580 2,250 2,379 1,500 1,500 Total needs 11,410 10,850 9,879 9,430 34,360 Less beginning inventory 2,600 2,580 2,250 2,379 2,600 Raw materials to be purchased 8,810 8,270 7,629 7,051 31,760 Cost of raw materials $35,240 $33,080 $30,516 $28,204 $127,040 to be purchased (b) Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Round your answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Gaeber Industries Schedule of Expected Cash Disbursements for Materials 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Accounts payable, beginning balance $13,800 $ $ $ $13,800 1st Quarter purchases 26,430 8,810 35,240 2nd Quarter purchases 24,810 8,270 33,080 3rd Quarter purchases 22,887 7,629 30,516 4th Quarter purchases 21,153 21,153 Total cash disbursements $40,230 $33,620 $31,157 $28,782 $133,789 for materials
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