Question

Production and Purchases Budgets
At the beginning of October, Comfy Cushions had 2,000 cushions and 12,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Month	Sales
October	10,000 cushions
November	12,000 cushions
December	15,000 cushions

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required
a. Prepare a production budget for October and November.
Do not use a negative sign with your answers.

Comfy Cushions
Production Budget
For the Months of October and November
	October	November	December
Unit Sales	Answer	Answer	Answer
Desired ending inventory	Answer	Answer
Finished goods requirements	Answer	Answer
Less beginning inventory	Answer	Answer
Production requirements	Answer	Answer

b. Prepare a purchases budget for raw materials in units and dollars for October.
Do not use a negative sign with your answers.

Comfy Cushions
Purchases Budget
For the Month of October
		October	November
Production requirements		Answer	Answer
Desired ending inventory		Answer
Raw materials requirements		Answer
Less beginning inventory		Answer
Purchase requirements (units)		Answer
Purchase requirements (in dollars)		Answer

Answer 1

Comfy Cushions
Production Budget
For the Months of October and November
	October	November	December
Unit Sales	10,000	12,000	15,000
Desired ending inventory	2,400	3,000
Finished goods requirements	12,400	15,000
Less beginning inventory	2,000	2,400
Production requirements	10,400	12,600
Comfy Cushions
Purchases Budget
For the Month of October
	October	November
Production requirements	52,000	63,000
Desired ending inventory	15,750
Raw materials requirements	67,750
Less beginning inventory	12,500
Purchase requirements (units)	55,250
Purchase requirements (in dollars)	49,725