Question

Garver Industries has budgeted the following unit sales: 2020 Units January 10,000 February 8,000 March 9,000 April 11,000 May 15,000 The finished goods units on hand on December 31, 2019, was 2,000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8,640 pounds of raw materials on hand at December 31, 2019.

For the first quarter of 2020, prepare a production budget. GARVER INDUSTRIES Production Budget For the Quarter Ended March 31, 2020 January February March Total Expected unit salesCost per poundRequired production unitsDesired ending finished goods unitsTotal required unitsBeginning finished goods unitsDirect materials purchases Required production units Direct materials purchases Cost per pound Total required units Beginning finished goods units Desired ending finished goods units Expected unit sales Beginning finished goods units Expected unit sales Required production units Cost per pound Desired ending finished goods units Direct materials purchases Total required units Add Less : Required production units Cost per pound Beginning finished goods units Direct materials purchases Desired ending finished goods units Expected unit sales Total required units Total required units Desired ending finished goods units Cost per pound Beginning finished goods units Required production units xpected unit sales Direct materials purchases

For the first quarter of 2020, prepare a direct materials budget. GARVER INDUSTRIES Direct Materials Budget For the Quarter Ended March 31, 2020 January February March Total Total pounds needed for production Direct materials purchases Desired ending direct materials Total materials required Units to be produced Direct materials per unit Beginning direct materials Cost per pound Total cost of direct materials purchases Total materials required Direct materials per unit Beginning direct materials Total pounds needed for production Units to be produced Desired ending direct materials Direct materials purchases Cost per pound Total cost of direct materials purchases Units to be produced Direct materials per unit Total pounds needed for production Cost per pound Total cost of direct materials purchases Desired ending direct materials Total materials required Beginning direct materials Direct materials purchases Total materials requiredCost per poundDirect materials per unitTotal cost of direct materials purchasesBeginning direct materialsTotal pounds needed for productionDesired ending direct materialsDirect materials purchasesUnits to be produced Beginning direct materialsDirect materials purchasesTotal pounds needed for productionTotal materials requiredUnits to be producedCost per poundDirect materials per unitTotal cost of direct materials purchasesDesired ending direct materials AddLess : Total pounds needed for productionBeginning direct materialsDesired ending direct materialsDirect materials purchasesDirect materials per unitTotal materials requiredCost per poundTotal cost of direct materials purchasesUnits to be produced Total materials requiredTotal cost of direct materials purchasesUnits to be producedBeginning direct materialsDirect materials purchasesCost per poundDirect materials per unitTotal pounds needed for productionDesired ending direct materials Direct materials per unitTotal cost of direct materials purchasesDirect materials purchasesCost per poundDesired ending direct materialsTotal pounds needed for productionBeginning direct materialsUnits to be producedTotal materials required Total cost of direct materials purchasesTotal pounds needed for productionDirect materials purchasesDirect materials per unitCost per poundTotal materials requiredDesired ending direct materialsBeginning direct materialsUnits to be produced $ $ $ $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

GARVER INDUSTRIES
Production Budget
For the Quarter Ended March 31, 2020
	January	February	March	Total
Units sales	10,000	8,000	9,000	27,000
Add: Desired ending inventory	8,000*20% = 1,600	9,000*20% = 1,800	11,000*20% = 2,200	11,000*20% = 2,200
Total Required Units	11,600	9,800	11,200	29,200
Less: Beginning inventory	2,000	8,000*20% = 1,600	9,000*20% = 1,800	2,000
Units to produce	9,600	8,200	9,400	27,200

April Production requirment

11,000

15,000*20% = 3,000

14,000

11,000*20% = 2,200

11,800

GARVER INDUSTRIES
Direct materials budget
For the Quarter Ended March 31, 2020
	January	February	March	Total
Budgeted production	9,600	8,200	9,400	27,200
Direct materials needed per unit in pounds	3 pounds	3 pounds	3 pounds	3 pounds
Total material needed for production in pounds	28,800	24,600	28,200	81,600
Add: Desired ending direct material inventory	24,600*30% = 7,380	28,200*30% = 8,460	11,800*3*30% = 10,620	11,800*3*30% = 10,620
Total material required in pounds	36,180	33,060	38,820	92,220
Less: Beginning direct material inventory	8640	24,600*30% = 7,380	28,200*30% = 8,460	8640
Direct material to be purchased	27,540	25,680	30,360	83,580
Cost of direct material per pound	$                           4.00	$                           4.00	$                                  4.00	$                                  4.00
Total cost of direct material purchases	$                    110,160	$                    102,720	$                           121,440	$                           334,320

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