At the beginning of October, the Comfort Cushion Company had 2,400 cushions and

Question

At the beginning of October, the Comfort Cushion Company had 2,400 cushions and 7,740 pounds of raw materials on hand. Budgeted sales for the next three months are:
Month Sales
October ………………………….......... 8,000 cushions
November …………………………...... 10,000 cushions
December …………………………....... 12,000 cushions
Comfort Cushion wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 30 percent of the following months budgeted sales. Three pounds of raw materials, at a standard cost of $0.60 per pound, are required to produce each cushion.

Required:
a. Prepare a production budget for October and November.
b. Prepare a purchases budget in units and dollars for October.

Explanation / Answer

Statement showing production Budget Paticulars October November December Sales             8,000.00           10,000.00         12,000.00 Opening Inv             2,400.00             3,000.00           3,600.00 Closing inv =30% of next Month sales             3,000.00             3,600.00 Production= Sales +ClFG - OpFG             8,600.00           10,600.00 Statement showing Puchases Budget Paticulars October November December Production= Sales +ClFG - OpFG             8,600.00           10,600.00 Raw Mat reqd for Prod          25,800.00           31,800.00 Opening RM             7,740.00 Closing RM @.25 of next Mnth Prod             7,950.00 Purchases = RM for prod+Cl-op          26,010.00 Standard Cost per Pound                     0.60 Total Cost of purchases          15,606.00

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

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