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

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

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 6,000; second quarter 6,900; third quarter 7,400
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: 7,840 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. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound.

Solutions

Expert Solution

production budget
                        Quarter                          
1 2 Year 3
expected sale units 6,000 6,900 7,400
Add: Ending inventory 1725 1850
total needs 7,725 8,750
less: Beginning inventory 1500 1725
production required 6,225 7,025 13,250
Direct materials budget
Quarter
1 2 six months
production required 6,225 7,025 7840
pounds required per units 4 4 4
total pounds 24900 28100 31360
add: ending inventory 11240 12544
total need 36140 40644
less Beginning inventory 9960 11,240
materials required 26180 29,404
cost per pound 5 5
materials cost 130900 147020

ekkarill92 answered 2 years ago
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