Question

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.

Answer 1

			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