Question

Fuqua Company’s sales budget projects unit sales of part 198Z of 10,300 units in January, 12,600 units in February, and 13,800 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 per pound. Fuqua 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, 2019.

(a)

Prepare a production budget for January and February 2020.

FUQUA COMPANY Production Budget                                                                       For the Two Months Ending February 28, 2020For the Quarter Ending February 28, 2020For the Month Ending January 31, 2020
		January		February
Direct Materials PurchasesUnits To Be ProducedTotal Cost of Direct Materials PurchasesTotal Materials RequiredCost Per PoundExpected Unit SalesDirect Material Pounds Per UnitRequired Production UnitsBeginning Finished Goods InventoryDesired Ending Finished Goods InventoryBeginning Direct MaterialsDesired Pounds in Ending Materials InventoryTotal Required UnitsTotal Pounds Needed for Production
AddLess:                                                                       Direct Material Pounds Per UnitTotal Required UnitsCost Per PoundDesired Pounds in Ending Materials InventoryTotal Materials RequiredUnits To Be ProducedBeginning Direct MaterialsBeginning Finished Goods InventoryDirect Materials PurchasesTotal Cost of Direct Materials PurchasesDesired Ending Finished Goods InventoryRequired Production UnitsTotal Pounds Needed for ProductionExpected Unit Sales
Units To Be ProducedCost Per PoundBeginning Finished Goods InventoryTotal Materials RequiredTotal Required UnitsDirect Materials PurchasesDesired Ending Finished Goods InventoryTotal Cost of Direct Materials PurchasesTotal Pounds Needed for ProductionDirect Material Pounds Per UnitRequired Production UnitsExpected Unit SalesDesired Pounds in Ending Materials InventoryBeginning Direct Materials
AddLess:                                                                       Total Required UnitsExpected Unit SalesBeginning Direct MaterialsTotal Materials RequiredBeginning Finished Goods InventoryTotal Cost of Direct Materials PurchasesDirect Material Pounds Per UnitUnits To Be ProducedCost Per PoundDesired Pounds in Ending Materials InventoryRequired Production UnitsDirect Materials PurchasesTotal Pounds Needed for ProductionDesired Ending Finished Goods Inventory
Required Production UnitsTotal Pounds Needed for ProductionExpected Unit SalesDesired Ending Finished Goods InventoryDirect Material Pounds Per UnitUnits To Be ProducedBeginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundTotal Required UnitsDesired Pounds in Ending Materials InventoryTotal Materials RequiredDirect Materials PurchasesTotal Cost of Direct Materials Purchases

Answer 1

• Requirement asked

FUQUA COMPANY
Production Budget
For the Two Months Ending February 28
	January	February
Expected Unit Sales	10,300	12,600
Add: Desired Ending Finished Goods Inventory	2,520	2,760
Total Required Units	12,820	15,360
Less: Beginning Finished Goods Inventory	2,060	2,520
Required Production Units	10,760	12,840

--Working

FUQUA COMPANY
Production Budget
For the Two Months Ending February 28
	January	February
Expected Unit Sales	10300	12600
Add: Desired Ending Finished Goods Inventory	=12600*20%	=13800*20%
Total Required Units	=10300+2520	=12600+2760
Less: Beginning Finished Goods Inventory	=10300*20%	=12600*20%
Required Production Units	=12820-2060	=15360-2520