PRACTICE EXERCISES 1. O the following data for the 6 months ending June 30, 2017

Question

PRACTICE EXERCISES 1. O the following data for the 6 months ending June 30, 2017. n January 1, 2017 the Heche Company budget committ ee has reached agreement on Prepare production and direct materials budgets by quarter for 6 months (LO 2) Sales units First quarter 5,000; second quarter 6,000; third quarter 7,000 40% of the next quarter's production Ending raw materials inventory: requirements 30% of the next quarter's expected sales units 7,500 units Ending finished goods inventory: Third-quarter 2017 production: The ending raw same percentage relationships to production and sales that occur in 2017. Two pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound. nstructions (a) Prepare a production budget by quarters for the 6-month period ended June 30, 2017. (b) Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2017

Explanation / Answer

a) Production Budget for the period ending June 30 ,2017. Particulars Q1 Q2 Q3 Production 5300 6300 (+) Beginnning Inventory 1500 1800 Total units available for Sale 6800 8100 (-) Sales 5000 6000 7000 Ending Inventory 1800 2100 Calculation for Q1 Ending Inventory 30% of the next quarters' expected Sales units Ending Inventory 6000*30% 1800 Total units available for Sale (Back Calculation) Sales + Ending Inventory Total units available for Sale 5000+1800 6800 Beginning Inventory 30% of the next quarters' expected Sales units Beginning Inventory 5000*30% 1500 Production (back calculation) (Total units available for Sale -Beginning Inventory ) Production 6800-1500 5300 Calculation for Q2 Ending Inventory 30% of the next quarters' expected Sales units Ending Inventory 7000*30% 2100 Total units available for Sale (Back Calculation) Sales + Ending Inventory Total units available for Sale 6000+2100 8100 Beginning Inventory Ending inventory for Q1 Beginning Inventory 1800 Production (back calculation) (Total units available for Sale -Beginning Inventory ) Production 8100-1800 6300 b) Direct Material budget for the period ending June 30, 2017 Particulars Q1 Q2 Q3 Raw Material required 10600 12600 15000 (+) Beginning Inventory 4240 5040 Raw Material available for Production 14840 17640 (-) Materials used in production 9800 11640 Ending Inventory 5040 6000 Calculation for Q1 Raw Material Required 5300 *2 10600 ( 1 unit requires 2 pounds of raw material) Beginning Inventory 40% of the next quarters' requirement Next Quarter Requirement 5300*2 10600 Beginning Inventory 10600*40% 4240 Ending Inventory 40% of the next quarters' requirement Next Quarter Requirement 6300*2 12600 Ending Inventory 12600*40% 5040 Material used in production (back calculation) (Raw material availble for sale - Ending Inventory Production 14840-5040 9800 Calculation for Q2 Raw Material Required 6300*2 12600 ( 1 unit requires 2 pounds of raw material) Beginning Inventory Ending inventory for Q1 5040 Ending Inventory 40% of the next quarters' requirement Next Quarter Requirement 7500*2 15000 Ending Inventory 15000*40% 6000 Material used in production (back calculation) (Raw material availble for sale - Ending Inventory Production 17640- 6000 11640 Q1 Q2 Material cost to be incurred on the purchase 53000 63000 (10600*5) (12600*5)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

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