Deleon Inc. is preparing its annual budgets for the year ending December 31, 201

Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below. An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $662,000 for product JB 50 and $363,000 for product 13 60, and administrative expenses of $544,000 for product JB 50 and $343,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%. Prepare the direct materials budget for the year.

Explanation / Answer

Direct Material Budget For the year ended December 31,2017 JB50 JB60 Units to be produced 398400 209400 Direct Material per unit (pounds) 1 3 Production Needs 398400 628200 Add: Desired Ending Direct Material Inventory 34700 18800 Total Needs 433100 647000 Less: Beginning Direct Material Inventory 44900 14700 Direct matterial to be purchased 388200 632300 Cost per pound $3 $3 Direct material Purchase cost $1,164,600 $1,896,900 working Mercandise Purchase Budget JB50 JB60 Total Budgeted sales in units 402500 201200 Add: Desired Ending Finished Goods Inventory 27700 19300 Total needs 430200 220500 Less: Beginning Finished Goods Inventory 31800 11100 Required Unit Purchases 398400 209400

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