Exercise 21-6 (Part Level Submission) On January 1, 2017, the Hardin Company bud

Question

Exercise 21-6 (Part Level Submission) On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017 Sales units: Ending raw materials inventory: 40% of the next quarter's production requirements Ending finished goods inventory: 25% of the next quarter's expected sales units Third-quarter production: First quarter 5,700; second quarter 6,100; third quarter 7,400 7,850 units The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound.

Explanation / Answer

Production budget :

Direct material budget :

1 2 Six month Sales units 5700 6100 Add: Desired ending inventory 1525 1850 Total needs 7225 7950 Less: Beginning inventory (1425) (1525) Production units 5800 6425 12225

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