Question
In: Accounting
A) Moriarity Company has budgeted the following unit sales: 1st Quarter 2019 7,000 2nd Quarter 2019...
A) Moriarity Company has budgeted the following unit sales:
1st Quarter
2019 7,000
2nd Quarter 2019 3,000
3rd Quarter 2019 4,000
Beginning finished goods for the first quarter was 1,400 units. The company's policy is to maintain an inventory of finished goods as 20% of the next quarter sales. The production budget for the SECOND quarter is __________. (no dollar signs, decimals or commas) HINT: you must calculate the first quarter in order to calculate the 2nd quarter.
B)JTS Corp had the following production budget:
1st Quarter 2019 8.000
units
2nd Quarter 2019 9,000 units
Each unit requires 4 pounds of raw materials at $2 per pound. JTS wants a raw materials inventory of 40% of the next months raw materials (the same percentage was used in 2018). The raw materials budget for the first quarter of 2019 is _______________. (no dollar signs, commas or decimals)
C) Shadwell Company has budgeted the following unit sales:
1st Quarter
2019
10.000 units
2nd Quarter
2019
7,000 units
It also had the following production budget:
1st Quarter 2019
12,000 units
2nd Quarter 2019 8,000 units
Each unit requires 6 pounds of raw materials at $3 per pound. Each unit requires 1.5 hours of direct labor at $20 per hour. Manufacturing overhead is 60% of direct labor cost.
Cost of goods sold for Shadwell Company for the 2nd quarter is ____________. (no dollar signs, commas nor decimals).
Solutions
Expert Solution
| Ans. A | Moriarity Company | ||||||
| Production Budget | |||||||
| First quarter | Second quarter | ||||||
| Sales | 7,000 | 3,000 | |||||
| Add: Desired Ending inventory | 600 | 800 | |||||
| Total needs | 7,600 | 3,800 | |||||
| Less: Beginning inventory | -1400 | -600 | |||||
| Units to be produced | 6,200 | 3,200 | |||||
| *Calculations for Ending inventory: | *Calculations for Beginning inventory: | ||||||
| Quarter | Quarter | ||||||
| 1 | 3,000 * 20% | 600 | 1 | Given | 1400 | ||
| 2 | 4,000 * 20% | 800 | 2 | Ending inventory of Q1 | 600 | ||
| Ans. B | JTS Corp. | ||||||
| Direct Materials Budget | |||||||
| First quarter | |||||||
| Budgeted production (units) | 8,000 | ||||||
| (X) Materials requirement per unit | 4 | ||||||
| Materials needed for production | 32000 | ||||||
| Add: budgeted ending inventory | 14400 | ||||||
| Total materials requirements | 46400 | ||||||
| Less: Budgeted beginning inventory | -12800 | ||||||
| Materials to be purchased | 33600 | ||||||
| (X) Direct materials per unit | $2 | ||||||
| Total budgeted direct materials | $67,200 | ||||||
| *Calculations for materials needed for second quarter : | |||||||
| Second Quarter | |||||||
| Budgeted production (units) | 9,000 | ||||||
| (X) Materials requirement per unit | 4 | ||||||
| Materials needed for production | 36000 | ||||||
| *Ending inventory for current quarter = Materials requirements of 2nd quarter * 40% | |||||||
| 36,000 * 40% = 14,400 | |||||||
| Quarter 1 beginning inventory = Ending inventory of quarter 4 of 2018 = 40% of first quarter of 2019 Materials needed for prodution | |||||||
| 32,000 * 40% | |||||||
| 12800 | |||||||
| Ans. C | Particulars | Amount | |||||
| Direct materials | $126,000 | ||||||
| Direct labor | $210,000 | ||||||
| Manufacturing overhead | $126,000 | ||||||
| Cost of goods sold | $462,000 | ||||||
| *Calculations for direct materials: | |||||||
| Second Quarter | |||||||
| Budgeted production (units) | 7,000 | ||||||
| (X) Materials requirement per unit | 6 | ||||||
| Materials to be purchased | 42000 |
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