Question

In: Accounting

Problem #2 The Maverick Company manufactures and sells three products X,Y, and Z. In September, 2003,...

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.  

Solutions

Expert Solution

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

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