On January 1, 2014, the Hardin Company budget committee has reached agreement on

Question

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 6,000; second quarter 6,200; third quarter 7,800 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: 7,810 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. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost S4 per pound. Your answer is correct. Prepare a production budget by quarters for the 6-month period ended June 30, 2014. Your answer is partially correct. Try again. Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2014.

Explanation / Answer

Budgets are prepared as shown below:

Hardin Company Production Budget For the Six month Ending June 30,2015 Quarter Particulars 1 2 Six Months Sale Units (a) 6,000 6,200 12,200 Planned ending units (b) 1,550 1,950 3,500 Beginning units (c ) 1,500 1,550 3,050 Planned production units (d)= (a+b-c) 6,050 6,600 12,650 Hardin Company Direct Material Purchase Budget For the Six month Ending June 30,2015 Quarter Particulars 1 2 Six Months Units to be produced 6,050 6,600 12,650 Direct Material per unit 3 3 3 Total pounds needed for production 18,150 19,800 37,950 Add: Desired ending raw materials 7,920 9,372 17,292 Total materials required 26,070 29,172 55,242 Less: Beginning raw material 7,260 7,920 15,180 Direct Material Purchase 18,810 21,252 40,062 Cost per pound 4 4 4 Total Cost of DM Purchases 75240 85008 1,60,248

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