Question 1 Production Budget Aqua-pro Inc. produces submersible water pumps for

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Question 1

Production Budget

Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:

Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000.

Required:

Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Question 2

Direct Materials Purchases Budget

Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next four months as follows:

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

Required:

Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.

Question 3

Direct Labor Budget

Evans Company produces asphalt roofing materials. The production budget in bundles for Evans' most popular weight of asphalt shingle is shown for the following months:

Each bundle produced requires (on average) 0.40 direct labor hours. The average cost of direct labor is $20 per hour.

Required:

Prepare a direct labor budget for March, April, and May, showing the hours needed and the direct labor cost for each month and in total. Do not include a multiplication symbol as part of your answer.

Explanation / Answer

Aqua Pro Inc Production Budget For the second Quarter April May June Total Sales 261000 319000 290000 870000 Desired Ending Inventory 79750 72500 87000 239250 Total Needs 340750 391500 377000 1109250 Less: Beginning Inventory -21000 -79750 -72500 -173250 Units Produced 319750 311750 304500 936000 Langer Company Direct Material Purchase Budget July August September Total Units to be produced 3500 4400 4900 12800 Direct Material per unit 15 15 15 45 Production needs 52500 66000 73500 192000 Desired Ending Inventory 19800 22050 28350 70200 Total Needs 72300 88050 101850 262200 Less: Beginning Inventory -15750 -19800 -22050 -57600 Direct Material to be purchased 56550 68250 79800 204600 Cost per ounce 0.08 0.08 0.08 0.24 Total Purchase Cost 4524 5460 6384 16368

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