Production and Purchases Budgets in Units At the end of business on June 30, 201

Question

Production and Purchases Budgets in Units At the end of business on June 30, 2014, the Wooly Rug Company had 100,000 square yards of rugs and 400,000 pounds of raw materials on hand. Budgeted sales for the third quarter of 2014 are: Month Sales July 210,000 sq. yards August 180,000 sq. yards September 140,000 sq. yards October 160,000 sq. yards The Wooly Rug Company wants to have sufficient square yards of finished product on hand at the end of each month to meet 40 percent of the following month's budgeted sales and sufficient pounds of raw materials to meet 30 percent of the following month's production requirements. Five pounds of raw materials are required to produce one square yard of carpeting. Prepare a production budget for the months of July, August, and September and a purchases budget in units for the months of July and August. Wooly Rug Company Production Budget For the Months of July, August, & September, 2014 July August September Budgeted production - sq. yards Answer Correct Answer Correct Answer Correct Wooly Rug Company Purchases Budget For the Months of July & August, 2014 July August Purchases in pounds Answer Incorrect Answer Incorrect

Explanation / Answer

production budget july august september october opening stock 100000 72000 56000 sales 210000 180000 140000 160000 closing stock 72000 56000 64000 number of units produced 238000 196000 132000 purchase budget july august september october opening stock 400000 270000 210000 material used 1050000 900000 700000 800000 closing stock 270000 210000 240000 purchase for month in pounds 1180000 960000 670000

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