The budget components for Park Company for the quarter ended June 30 appear belo

Question

The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for $12 each. Budgeted sales and production for the next three months are:

Park desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Park desires to have 10 percent of the following month’s production material needs on hand. At March31, Park had 13,000 pounds of plastic on hand. The materials used in production cost $0.60 per pound. Each trash can produced requires 0.10 hours of direct labor.

Determine how much the material purchases budet will be for the month ending April 30.

Sales Production April 20,000 units 26,000 units May 50,000 units 46,000 units June 30,000 units 29,000 units

Explanation / Answer

Ans. Particulars Amount Budgeted production units for april 26000 Pounds of plastic per trash can 5 Total pounds of plastic needed for sales 130000 Add: Desired Ending inventory 23000 Total pounds needed 153000 Less: Beginning inventory -13000 Pounds of plastic to be purchased 140000 Cost per pound 0.6 Cost of direct materials purchases 84000 *Ending inventory =   Total pounds of plastic needed for may * 10% (46000 * 5) * 10% 23000 *Total pounds of plastic needed for sales   =   Budgeted production units * pounds of plastic per trash can *Cost of direct materials purchases = Pounds of plastic to be purchased * Cost per pound

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.