HARDIN COMPANY Production Budget For the Six Months Ending June 30, 2014 Quarter
ID: 2464596 • Letter: H
Question
HARDIN COMPANY
Production Budget
For the Six Months Ending June 30, 2014
Quarter
1
2
Six Months
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HARDIN COMPANY
Direct Materials Budget
For the Six Months Ending June 30, 2014
Quarter
1
2
Six Months
On January 1, 2014, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2014.Sales units: First quarter 5,700; second quarter 6,800; third quarter 7,200 Ending raw materials inventory: 40% of the next quarter’s production requirements Ending finished goods inventory: 25% of the next quarter’s expected sales units Third-quarter production: 7,580 units
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. 5 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound.
Explanation / Answer
First
Second
Sales (1)
5700
6800
Ending finished goods (25% of next quarters expected sales) (2)
1700
1800
Opening finished goods (3)
1425
1700
Total production (4)=(1)+(2)-(3)
5975
6900
Raw material required for each unit (5)
5
5
Total raw material requirement for production (6)=(4)*(5)
29875
34500
Ending inventory (40% of next quarters requirement) (7)
13800
15160
Opening invetory (8)
11950
13800
Total raw material purchase requirement (9)=(6)+(7)-(8)
31725
35860
Cost of per unit of raw material (10)
5
5
Total raw material purchase cost
158625
179300
First
Second
Sales (1)
5700
6800
Ending finished goods (25% of next quarters expected sales) (2)
1700
1800
Opening finished goods (3)
1425
1700
Total production (4)=(1)+(2)-(3)
5975
6900
Raw material required for each unit (5)
5
5
Total raw material requirement for production (6)=(4)*(5)
29875
34500
Ending inventory (40% of next quarters requirement) (7)
13800
15160
Opening invetory (8)
11950
13800
Total raw material purchase requirement (9)=(6)+(7)-(8)
31725
35860
Cost of per unit of raw material (10)
5
5
Total raw material purchase cost
158625
179300
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