Question

Garver Industries has budgeted the following unit sales:

2017		Units
January		10,000
February		8,000
March		9,000
April		11,000
May		15,000

The finished goods units on hand on December 31, 2016, was 2,000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8,640 pounds of raw materials on hand at December 31, 2016.
For the first quarter of 2017, prepare a production budget.

GARVER INDUSTRIES Production Budget For the Quarter Ended March 31, 2017
			January		February		March		Total
Desired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods unitsCost per poundDirect materials purchases
Direct materials purchasesCost per poundDesired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods units
Cost per poundDirect materials purchasesExpected unit salesTotal required unitsRequired production unitsBeginning finished goods unitsDesired ending finished goods units
AddLess:	Direct materials purchasesExpected unit salesRequired production unitsCost per poundBeginning finished goods unitsTotal required unitsDesired ending finished goods units
Cost per poundTotal required unitsExpected unit salesBeginning finished goods unitsDirect materials purchasesDesired ending finished goods unitsRequired production units

For the first quarter of 2017, prepare a direct materials budget.

GARVER INDUSTRIES Direct Materials Budget For the Quarter Ended March 31, 2017
			January		February		March		Total
Direct materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDirect materials per unitBeginning direct materialsDesired ending direct materialsCost per poundTotal materials requiredUnits to be produced			$		$		$
Total pounds needed for productionDirect materials purchasesDirect materials per unitUnits to be producedTotal cost of direct materials purchasesTotal materials requiredDesired ending direct materialsBeginning direct materialsCost per pound
Cost per poundUnits to be producedDesired ending direct materialsDirect materials purchasesTotal pounds needed for productionBeginning direct materialsDirect materials per unitTotal materials requiredTotal cost of direct materials purchases
Total materials requiredCost per poundUnits to be producedDirect materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDesired ending direct materialsDirect materials per unitBeginning direct materials
Direct materials purchasesCost per poundTotal materials requiredDirect materials per unitDesired ending direct materialsBeginning direct materialsTotal pounds needed for productionTotal cost of direct materials purchasesUnits to be produced
AddLess:	Direct materials per unitTotal pounds needed for productionTotal cost of direct materials purchasesBeginning direct materialsTotal materials requiredUnits to be producedCost per poundDirect materials purchasesDesired ending direct materials
Units to be producedDirect materials purchasesDirect materials per unitTotal pounds needed for productionTotal materials requiredDesired ending direct materialsTotal cost of direct materials purchasesCost per poundBeginning direct materials
Desired ending direct materialsDirect materials per unitDirect materials purchasesCost per poundTotal materials requiredUnits to be producedTotal cost of direct materials purchasesBeginning direct materialsTotal pounds needed for production
Total cost of direct materials purchasesDirect materials per unitUnits to be producedTotal pounds needed for productionDesired ending direct materialsBeginning direct materialsDirect materials purchasesCost per poundTotal materials required			$		$		$		$

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Answer 1

For the Quarter Ended March 31, 2017
	Jan	Feb	Mar	Total
Expected unit sales	10000	8000	9000	27000
Desired ending finished goods units	1600	1800	2200	2200
Total required units	11600	9800	11200	29200
Less Beginning finished goods	2000	1600	1800	2000
Required production units	9600	8200	9400	27200

April units: 11,000 × 20%

GARVER INDUSTRIES
Direct Materials Budget
For the Quarter Ended March 31, 2017
	Jan	Feb	Mar	Total
Units to be produced	9600	8200	9400	27200
Direct materials per unit	3	3	3	3
Total pounds needed for production	28800	24600	28200	81600
Desired ending direct materials (pounds)	7380	8460	10620	10620
Total materials required	36180	33060	38820	92220
Less: Beginning direct materials (pounds)	8640	7380	8460	8640
Direct materials purchases	27540	25680	30360	83580
Cost per pound	$                                  4.00	$                4.00	$               4.00	$               4.00
Total cost of direct materials purchases	$                     110,160.00	$   102,720.00	$ 121,440.00	$ 334,320.00

April units: 11,800 × 3 = 35,400 × 30%=10620