In: Accounting
Problem #2
The Maverick Company manufactures and sells three products X,Y, and Z. In September, 2003, Maverick's budget department gathered the following forecast date related to its
operations in the coming year.
Projected Sales for Fourth Quarter
Item | Quantity | Unit Price |
Product X | 4,500 | $12 |
Product Y | 2,000 | $25 |
Product Z | 3,000 | $20 |
Inventories in Units
Item | Beginning | Desired Ending |
Product X | 600 | 900 |
Product Y | 500 | 400 |
Product Z | 400 | 500 |
Material A | 2,000 | 2,500 |
Material B | 1,500 | 2,000 |
Material C | 2,500 | 2,000 |
Materials Production Requirements for Each Unit of Product
Item | Unit of Material A | Unit of Material B | Unit of Material C |
Product X | 3 | 1 | 2 |
Product Y | 2 | 2 | 4 |
Product Z | 1 | 3 | 2 |
There is no beginning or ending inventory of work in process. Budgeted unit costs for materials A,B, and C are $.50, $2.00 and $1.50 respectively.
Required :
(1) Prepare a sales budget that includes quantities and revenues for each of the three products.
(2) Prepare a production budget for all three products.
(3) Prepare a materials usage budget in units & amount.
(4) Prepare a materials purchases budget in units & amount.
Sales budget for all three products is given below | ||||
Item | Product X | Product Y | Product Z | |
Quantity | 4500 | 2000 | 3000 | |
Unit price | $12 | $25 | $20 | |
Budgeted sales revenue | $54,000 | $50,000 | $60,000 | |
Production budget for all three products | ||||
Item | Product X | Product Y | Product Z | |
Budgeted sales units | 4500 | 2000 | 3000 | |
Add: Desired inventory | 900 | 400 | 500 | |
Total units required for production | 5400 | 2400 | 3500 | |
Less: Beginning inventory | 600 | 500 | 400 | |
Budgeted production | 4800 | 1900 | 3100 | |
Materials usage budget for all three material | ||||
Raw material | Material A | Material B | Material C | |
Material required for production | 21300 | 17900 | 23400 | |
Add: Desired ending inventory | 2500 | 2000 | 2000 | |
Total raw material required | 23800 | 19900 | 25400 | |
Less: Beginning inventory | 2000 | 1500 | 2500 | |
Budgeted purchases | 21800 | 18400 | 22900 | |
Material A required for production of three units | ||||
Product X | 14400 | 4800*3 | ||
Product Y | 3800 | 1900*2 | ||
Product Z | 3100 | 3100*1 | ||
Total | 21300 | |||
Material B required for production of three units | ||||
Product X | 4800 | 4800*1 | ||
Product Y | 3800 | 1900*2 | ||
Product Z | 9300 | 3100*3 | ||
Total | 17900 | |||
Material C required for production of three units | ||||
Product X | 9600 | 4800*2 | ||
Product Y | 7600 | 1900*4 | ||
Product Z | 6200 | 3100*2 | ||
Total | 23400 | |||
4 | ||||
Material purchase budget in units | ||||
Raw material | Material A | Material B | Material C | |
Budgeted purchases | 21800 | 18400 | 22900 | |
Budgeted unit costs | $0.50 | $2.00 | $1.50 | |
Budgeted purchases (Dollar) | $10,900 | $36,800 | $34,350 | |