Question

Concord Company’s sales budget projects unit sales of part 198Z of 11,000 units in January, 12,600 units in February, and 14,000 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $3 per pound. Concord Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2016.

Prepare a production budget for January and February 2017. CONCORD COMPANY Production Budget For the Two Months Ending February 28, 2017For the Month Ending January 31, 2017For the Quarter Ending February 28, 2017 January February Total Materials RequiredBeginning Direct MaterialsUnits To Be ProducedTotal Pounds Needed for ProductionBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDirect Materials PurchasesTotal Required UnitsRequired Production UnitsDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitTotal Cost of Direct Materials PurchasesExpected Unit Sales AddLess : Total Materials RequiredBeginning Direct MaterialsTotal Required UnitsBeginning Finished Goods InventoryDesired Ending Finished Goods InventoryTotal Pounds Needed for ProductionUnits To Be ProducedTotal Cost of Direct Materials PurchasesDesired Pounds in Ending Materials InventoryCost Per PoundDirect Material Pounds Per UnitDirect Materials PurchasesRequired Production UnitsExpected Unit Sales Units To Be ProducedDirect Materials PurchasesDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryTotal Required UnitsCost Per PoundTotal Pounds Needed for ProductionBeginning Direct MaterialsDirect Material Pounds Per UnitBeginning Finished Goods InventoryExpected Unit SalesTotal Materials RequiredRequired Production UnitsTotal Cost of Direct Materials Purchases AddLess : Desired Ending Finished Goods InventoryRequired Production UnitsDirect Materials PurchasesTotal Materials RequiredBeginning Direct MaterialsTotal Pounds Needed for ProductionUnits To Be ProducedTotal Cost of Direct Materials PurchasesBeginning Finished Goods InventoryCost Per PoundDirect Material Pounds Per UnitTotal Required UnitsDesired Pounds in Ending Materials InventoryExpected Unit Sales Beginning Finished Goods InventoryBeginning Direct MaterialsCost Per PoundRequired Production UnitsDesired Ending Finished Goods InventoryTotal Materials RequiredDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitExpected Unit SalesTotal Cost of Direct Materials PurchasesDirect Materials PurchasesTotal Pounds Needed for ProductionUnits To Be ProducedTotal Required Units

Prepare a direct materials budget for January 2017. CONCORD COMPANY Direct Materials Budget For the Quarter Ending February 28, 2017For the Two Months Ending February 28, 2017For the Month Ending January 31, 2017 January Desired Ending Finished Goods InventoryTotal Required UnitsUnits To Be ProducedExpected Unit SalesRequired Production UnitsTotal Pounds Needed for ProductionBeginning Finished Goods InventoryDesired Pounds in Ending Materials InventoryTotal Cost of Direct Materials PurchasesTotal Materials RequiredDirect Materials PurchasesDirect Material Pounds Per UnitBeginning Direct MaterialsCost Per Pound Desired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryRequired Production UnitsBeginning Direct MaterialsCost Per PoundDirect Material Pounds Per UnitBeginning Finished Goods InventoryTotal Cost of Direct Materials PurchasesTotal Materials RequiredDirect Materials PurchasesTotal Pounds Needed for ProductionExpected Unit SalesTotal Required UnitsUnits To Be Produced Direct Material Pounds Per UnitDirect Materials PurchasesTotal Cost of Direct Materials PurchasesTotal Materials RequiredExpected Unit SalesRequired Production UnitsTotal Pounds Needed for ProductionBeginning Direct MaterialsTotal Required UnitsUnits To Be ProducedBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials Inventory AddLess : Expected Unit SalesTotal Pounds Needed for ProductionDesired Pounds in Ending Materials InventoryTotal Required UnitsDesired Ending Finished Goods InventoryDirect Materials PurchasesDirect Material Pounds Per UnitBeginning Finished Goods InventoryTotal Materials RequiredRequired Production UnitsTotal Cost of Direct Materials PurchasesUnits To Be ProducedBeginning Direct MaterialsCost Per Pound Total Pounds Needed for ProductionExpected Unit SalesTotal Required UnitsDirect Materials PurchasesDesired Pounds in Ending Materials InventoryUnits To Be ProducedRequired Production UnitsBeginning Finished Goods InventoryDesired Ending Finished Goods InventoryTotal Cost of Direct Materials PurchasesCost Per PoundTotal Materials RequiredBeginning Direct MaterialsDirect Material Pounds Per Unit AddLess : Direct Materials PurchasesBeginning Direct MaterialsDesired Ending Finished Goods InventoryTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be ProducedBeginning Finished Goods InventoryExpected Unit SalesTotal Materials RequiredCost Per PoundDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitRequired Production UnitsTotal Cost of Direct Materials Purchases Expected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredBeginning Direct MaterialsDesired Ending Finished Goods InventoryTotal Pounds Needed for ProductionTotal Required UnitsDesired Pounds in Ending Materials InventoryCost Per PoundBeginning Finished Goods InventoryUnits To Be ProducedDirect Material Pounds Per UnitDirect Materials Purchases Direct Materials PurchasesExpected Unit SalesRequired Production UnitsUnits To Be ProducedTotal Required UnitsTotal Cost of Direct Materials PurchasesBeginning Direct MaterialsTotal Pounds Needed for ProductionBeginning Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitTotal Materials RequiredCost Per PoundDesired Ending Finished Goods Inventory $ Direct Materials PurchasesDesired Ending Finished Goods InventoryTotal Cost of Direct Materials PurchasesBeginning Direct MaterialsExpected Unit SalesUnits To Be ProducedTotal Pounds Needed for ProductionBeginning Finished Goods InventoryTotal Materials RequiredCost Per PoundDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitRequired Production UnitsTotal Required Units $

Answer 1

CONCORD COMPANY
Production Budget
For the Two Months Ending February 28, 2017
	January	February
Units sales	11,000	12,600
Add: Desired ending finished goods inventory	12,600*20% = 2.520	14,000*20% = 2,800
Total Required Units	13,520	15,400
Less: Beginning finished goods inventory	11,000*20% = 2,200	12,600*20% = 2.520
Required Production Units	11,320	12,880

CONCORD COMPANY
Direct material budget
For the Month Ending January 31, 2017
	January
Required Production Units	11,320
Direct Material Pounds Per Unit	3 pounds
Total Pounds Needed for Production	33,960
Add: Desired ending direct material inventory	12,880*3*40% = 15,456
Total Required Units	49,416
Less: Beginning direct material inventory	33,960*40% = 13,584
Direct material to be purchased	35,832
Cost of direct material per pound	$                                        3
Total cost of direct material purchases	$                           107,496

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