Superior Company manufactures a single product. It keeps its inventory of finished goods at twice the...

Superior Company manufactures a single product. It keeps its inventory of finished goods at twice the coming month's budgeted sales and inventory of raw materials at 150% of the coming month's budgeted production. Each unit of product requires five pounds of materials, which cost $3 per pound. The sales budget is, in units: May, 10,000; June, 12,400; July, 12,600; August, 13,200.

a. Compute budgeted production for June.

b. Compute budgeted production for July.

c. Compute budgeted material purchases for June in pounds

d. Compute budgeted material purchases for June in dollars.

Solutions

Expert Solution

Finished goods ending Inventory = 2 * Next month sales

a) Budgeted production for June

Ending Inventory of June = 2 * 12,600 = 25,200

Beginning Inventory of June = 2 * 12,400 = 24,800

Budgeted production for June = 12,400 + 25,200 - 24,800

Budgeted production for June = 12,800

b) Budgeted production for July

Ending Inventory of July = 2*13,200 = 26,400

Beginning Inventory of July = 25,200

Budgeted production for July = 12,600 + 26,400 - 25,200

Budgeted production for July = 13,800.

c) Budgeted material purchases for June in pounds.

Ending Inventory of raw materials = 150% * 13,800 * 5 = 103,500

Beginning Inventory of raw materials = 150% * 12,800 * 5 = 96,000

Budgeted production for June = (12,800 * 5) = 64,000

Budgeted material purchases for June = 64,000 + 103,500 - 96,000

Budgeted material purchases for June = 71,500

d) Cost per pound = $3

Budgeted material purchases for June = 71,500

Budgeted material purchases for June in dollars = 71,500 * $3

Budgeted material purchases for June in dollars = $214,500

ekkarill92 answered 11 months ago

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