O’Reilly Outfitters Inc. has forecasted sales of 32,000 tents for the upcoming y
ID: 2575110 • Letter: O
Question
O’Reilly Outfitters Inc. has forecasted sales of 32,000 tents for the upcoming year. The anticipated finished goods inventory at January 1 is 5,000 units, but management desires this inventory level to be reduced by 20% on December 31.
Two materials are used in the production of tents: 36 square yards of nylon having a standard cost of $2.00 per yard, and 20 feet of metal tubing having a standard cost of $.50 per linear foot. Raw material inventory information is as follows:
Estimated inventory January 1
Desired inventory December 31
Nylon
110,000 yds.
80,000 yds.
Metal tubing
45,000 ft.
35,000 ft.
(1) Prepare a production budget for the upcoming year.
(2) Prepare a direct materials budget for the upcoming year.
Estimated inventory January 1
Desired inventory December 31
Nylon
110,000 yds.
80,000 yds.
Metal tubing
45,000 ft.
35,000 ft.
Explanation / Answer
a) Production budget :
(2) Prepare a direct materials budget for the upcoming year.
Production budget Sales 32000 Add: Desired ending inventory 4000 Total needs 36000 Less: Beginning inventory (5000) Production unit 31000Related Questions
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