Question

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:		First quarter  5,200; second quarter  6,700; third quarter  7,000
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:		7,380 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.  3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $ 5 per pound.

Prepare a production budget by quarters for the 6-month period ended June 30, 2017.

HARDIN COMPANY Production Budget   For the Six Months Ending June 30, 2017June 30, 2017For the Quarter Ending June 30, 2017
	Quarter
		1		2		Year
Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
AddLess:   Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
AddLess:   Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units

Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2017.

HARDIN COMPANY Direct Materials Budget   For the Six Months Ending June 30, 2017June 30, 2017For the Quarter Ending June 30, 2017
		Quarter
		1		2		Six Months
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
AddLess:   Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
AddLess:   Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced		$		$
Beginning Direct MaterialsCost Per PoundDesired Ending Direct MaterialsDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced		$		$		$

Answer 1

	Hardin Company
	Production Budget
	For the Six Months Ending June 30, 2017
	Quarter
	1	2	Year
Expected Unit Sales	5200	6700
Add: Desired ending Finished goods units	1675	1750
Total Required Units	6875	8450
Less: Beginning Finished goods units	1300	1675
Required Production Units	5575	6775	12350
b	Hardin Company
	Direct Materials Budget
	For the Six Months Ending June 30, 2017
	1	2	Six months
Units to be produced	5575	6775
Direct materials per unit	3	3
Total pounds needed for production	16725	20325
Add: Desired ending Direct Materials	8130	8856
Total materials required	24855	29181
Less: Beginning Direct Materials	6690	8130
Direct materials purchases	18165	21051
Cost per pound	5	5
Total cost of direct materials purchases	90825	105255	196080
Workings:
Desired ending Direct Materials:
Quarter 1 = 20325*40%=8130
Quarter 2 = 7380*3*40%=8856
Beginning Direct Materials Q1 = 16725*40%=6690