Question

Direct Materials Purchases Budget

FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following:

Practice Balls Match Balls

Units Selling Price Units Selling Price

January 43,000 $8.85 6,400 $17.40

February 60,000 $8.85 8,000 $17.40

March 88,000 $8.85 13,000 $17.40

April 115,000 $8.85 17,500 $17.40

FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales. Beginning inventory in January was 8,600 practice soccer balls and 1,280 match soccer balls.

Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick’s policy is that 20 percent of the following month’s production needs for raw materials be in ending inventory. Beginning inventory in January for all raw materials met this requirement.

Required:

Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year. If required, round your answers to the nearest cent.

Direct materials purchases budget for polyvinyl chloride panels:

FlashKick Company

Direct Materials Purchases Budget - Polyvinyl Chloride Panels

For January and February

Polyvinyl chloride panels: January February

Units produced

Direct materials per unit

Direct materials for production

Desired ending inventory

Total needed

Less: Beginning inventory

Direct materials purchases

Direct materials purchases budget for bladder and valve:

FlashKick Company

Direct Materials Purchases Budget - Bladder and Valve

For January and February

Bladder and valve: January February

Units produced

Direct materials for production

Total needed

Direct materials purchases

Direct materials purchases budget for glue:

FlashKick Company

Direct Materials Purchases Budget - Glue

For January and February

Glue: January February

Units produced

Direct materials for production

Total needed

Direct materials purchases

Answer 1

Answer:

a.

FlashKick Company
Direct Materials Purchases Budget - Polyvinyl
Chloride Panels
For January and February
Polyvinyl chloride panels:	January	February
Units produced	46,400	65,600
Direct materials per unit	0.7	0.7
Direct materials for production	32480	45920
Desired ending inventory	9,184	13,076
Total needed	41,664	58,996
Less: Beginning inventory	6496	9184
Direct materials purchases	35,168	49,812

b.

FlashKick Company
Direct Materials Purchases Budget - Bladder and Valve
For January and February
Bladder and valve	January	February
Units produced	46,400	65,600
Direct materials per unit	1	1
Direct materials for production	46,400	65,600
Desired ending inventory	13,120	18,680
Total needed	59,520	84,280
Less: Beginning inventory	9,280	13,120
Direct materials purchases	50,240	71,160

c.

FlashKick Company
Direct Materials Purchases Budget - Glue
For January and February
Glue	January	February
Units produced	46,400	65,600
Direct materials per unit	3	3
Direct materials for production	139,200	196,800
Desired ending inventory	39,360	56,040
Total needed	178,560	252,840
Less: Beginning inventory	27,840	39,360
Direct materials purchases	150,720	213,480

Calculation:

Here we need to onstruct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year.

So the direct materials purchases budget need to be prepared for Polyvinyl chloride panels, Bladder and valve and Glue.

The first step is to find the Units produced for each month as FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales.

The Beginning inventory in January = 8,600 practice soccer balls

	January	February	March
Units sales	43,000	60,000	88,000
Add: Required ending inventory (20% x Next month sales)	12,000	17,600	23,000
Total needed	55,000	77,600	111,000
Less: Opening inventory (previous closing inventory) (20% x current month sales)	-8,600	-12,000	-17,600
Units produced	46,400	65,600	93,400

Then we need to prepare the  direct materials purchases budget for each type of raw materials.

a. Polyvinyl chloride panels:

So first as we have already calculated the Units produced, we need to find the Direct materials for production by multiplying the Units produced with Direct materials per unit as below:

	January	February	March
Units produced	46,400	65,600	93,400
Direct materials per unit	0.7	0.7	0.7
Direct materials for production	32480	45920	65380

Then we need to add  Desired ending inventory to the Direct materials for production.

Desired ending inventory

January = 45920 x 20% = 9184

February =  65380 x 20% = 13076

Then we need to deduct the Beginning inventory from total needs.

Beginning inventory :

January = 32480 x 20% = 6496

February =  45920 x 20% = 9184

b.Bladder and valve

We need to find the Direct materials for production by multiplying the Units produced with Direct materials per unit as below:

	January	February	March
Units produced	46,400	65,600	93,400
Direct materials per unit	1	1	1
Direct materials for production	46,400	65,600	93400

Then we need to add  Desired ending inventory to the Direct materials for production.

Desired ending inventory

January = 65600 x 20% = 13120

February =  93400 x 20% = 18680

Then we need to deduct the Beginning inventory from total needs.

Beginning inventory :

January = 46400 x 20% = 9280

February =  65600 x 20% = 13120

c. Glue:

We need to find the Direct materials for production by multiplying the Units produced with Direct materials per unit as below:

Glue	January	February	March
Units produced	46,400	65,600	93,400
Direct materials per unit	3	3	3
Direct materials for production	139,200	196,800	280200

Then we need to add  Desired ending inventory to the Direct materials for production.

Desired ending inventory

January = 196800 x 20% = 39360

February =  280200 x 20% = 56040

Then we need to deduct the Beginning inventory from total needs.

Beginning inventory :

January = 139200 x 20% = 27840

February =  196800 x 20% = 39360