E13-6  

Prepare production and direct materials budgets by quarters for 6 months.

(LO 2), AP

On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017.

• Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000.
• Ending raw materials inventory: 40% of the next quarter's production requirements.
• Ending finished goods inventory: 25% of the next quarter's expected sales units.
• Third-quarter production: 7,200 units.

The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.

Instructions

(a)

Prepare a production budget by quarters for the 6-month period ended June 30, 2017.

(b)

Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2017.

After reading the article below, make sure to answer the following questions

1. List three ways in which the U.S. economy has shown strength in 2019.

2. How many years has it now been since the United States last experienced a recession?

3. What are two signs that the U.S. economy may be slowing down in the second quarter? Please give a 3 sentence explanation of each sign.Do these appear to be one-time issues or do they potentially mark the start of a longer downturn Make sure to explain your answer.

U.S. ECONOMY LOST SOME STEAM AT START OF SECOND QUARTER

The U.S. economy got off to a sluggish start in the second quarter, with both consumers and manufacturers pulling back in April amid trade tensions, a global slowdown and waning effects of the 2017 tax cuts.

Retail sales (Links to an external site.) fell a seasonally adjusted 0.2% in April from the previous month, the Commerce Department said Wednesday, driven by declines in categories such as electronics, home improvement, motor vehicles, auto parts and at online shopping businesses.

Factory output (Links to an external site.) dropped a steeper 0.5% in April from March, according to Federal Reserve data, the third monthly decline in the past four months. It was down 2.1% in the first quarter on an annualized basis.

A closely watched measure of U.S. freight demand also is sending a troubling signal. The Cass Freight Index for shipments dropped 3.2% in April, the fifth straight month in negative territory. The authors of the report, Cass Information Systems, said the numbers signal “material and growing downside risk to the economic outlook.”

Together, the reports suggest the U.S. economy lost momentum after growing at a 3.2% annual rate (Links to an external site.) in the first quarter.

Macroeconomic Advisers, a forecasting firm, lowered its second-quarter economic growth estimate to a 2% rate from 2.1% in response. Oxford Economics lowered its forecast to a 1.6% pace from 1.7%.

Economists had expected the second quarter to be weaker than the first, when output was buoyed in part by a decline in imports and an increase in inventories, offsetting weaker gains in consumer spending and business investment. But the new data suggested there could be “maybe a little more of a step down than we initially thought,” said Michael Feroli, chief economist at J.P. Morgan.

Overall, the U.S. economy remains strong. Employers added 263,000 jobs  (Links to an external site.)in April, unemployment reached a near-50-year low and wages continued to inch up—all encouraging signs for household pocketbooks. Economists warned against overreacting to Wednesday’s batch of wobbly data.

“As long as the labor market holds in, I don’t think it’s an existential issue for the expansion,” which began nearly 10 years ago, said Mr. Feroli.

If he is right, the U.S. economy in June will mark a decade without a recession, the longest stretch on record. “I think we’re going to make it to our 10th birthday,” he said.

The fall in retail sales could be partly because tax refunds weren’t as generous as consumers expected, perhaps prompting households to put off major purchases, he said.

Sales have been volatile in recent months, dropping in February before bouncing back in March (Links to an external site.).

Economists also saw the April retail-sales decline as a sign that households might be rattled by the trade dispute between the U.S. and China. Last week President Trump said that tariffs on $200 billion in Chinese goods would rise to 25% from 10%. The president left open the possibility of additional actions. China retaliated (Links to an external site.) by raising tariffs on $60 billion of U.S. imports.

As the stimulus from recent tax cuts and increased federal spending dissipates and the trade fight escalates, “you’re going to see stronger headwinds that will curb growth in consumer spending,” said Gregory Daco, chief U.S. economist at Oxford Economics.

Some of the recent manufacturing contraction is likely due to the large buildup in inventories in the first quarter, analysts said. That means factories don’t need to produce as much to meet demand.

But the persistent weakness since the start of the year suggests American factories have been squeezed by trade tensions, a weaker global economy and a strong dollar, which makes U.S. exports more expensive in world markets.

“I don’t think there’s any way to put lipstick on the manufacturing numbers,” said Joshua Shapiro, chief U.S. economist at MFR Inc. “The growth isn’t there. The domestic demand in the U.S. is pretty decent, but export demand is weakening.”

At Thomaston Mills, a bedsheet maker in Thomaston, Ga., production is slower this year because orders are down. Custom orders for the company’s bedding and towels typically rise when hoteliers are confident in the economy, said plant manager Jimmy Bond.

Notebook maker Top Flight Inc. recently received a big order that will boost production for the first time in several years, said Chief Operating Officer Wejun Robinson.

But rising costs for paper, overtime and imports as a result of tariffs on goods from China are hurting the Chattanooga, Tenn.-based company’s profit, he said. Top Flight’s margins will be even thinner than expected after the Trump administration increased tariffs on goods including some notebook varieties it doesn’t make in the U.S. to 25% last Friday from 10% previously.

“We priced our products at the 10% rate,” Mr. Robinson said. “It will make a difference.”

Important U.S. trading partners such as China and Germany are going through a volatile period as fears of a broader trade war depress confidence.

Growth in Chinese retail sales, industrial output and investment in fixed assets slowed (Links to an external site.) in April despite a heavy dose of government stimulus. 

In Germany, new factory orders are slowing and major manufacturers such as Continental (Links to an external site.)AG and Daimler (Links to an external site.) AG posted lower first-quarter earnings. But domestic consumption and a strong construction sector helped support the German economy (Links to an external site.) in the first quarter.

1. The indices of refraction for the fast and slow axes of quartz with 589 nm light are 1.5462 and 1.5553, respectively.

   1. (a) By what fraction of a wavelength is the e-ray retarded, relative to the o-ray, for every

      wavelength of travel in quartz?

   2. (b) What is the minimum thickness of quartz needed to manufacture a quarter-wave plate

      (QWP)?

   3. (c) Imagine that the thickness found in part (b) turned out to be too thin for the QWP to be

      durable and you want to manufacture a QWP with a thickness of at least 0.725 mm. What will be the thickness of the thinnest possible QWP that will be larger than 0.725 mm?

Do It! Review 21-2

Pargo Company is preparing its master budget for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales. Sales for the year are expected to total 2,000,000 units. Quarterly sales are 22%, 26%, 27%, and 25%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $47 per unit beginning in the fourth quarter. Sales in the first quarter of 2018 are expected to be 15% higher than the budgeted sales for the first quarter of 2017.

Production. Management desires to maintain the ending finished goods inventories at 25% of the next quarter’s budgeted sales volume.

Direct materials. Each unit requires 2 pounds of raw materials at a cost of $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements. Assume the production requirements for first quarter of 2018 are 498,000 pounds.

Prepare the sales, production, and direct materials budgets by quarters for 2017.

Oak Creek Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales: Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $46 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.

Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarter's budgeted sales volume.

Direct materials: Each unit requires 2 kg of raw materials at a cost of $10 per kilogram. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2021 are 630,000 kg.

1. Prepare the sales budget by quarters for 2020.

2. Prepare the production budget by quarters for 2020.

3. Prepare the direct materials budget by quarters for 2020.

When the economy is in recession, government revenue falls due to a falling tax base. Therefore the proper role of government should be to increase taxes and cut spending so as to balance the Federal budget. Do you agree? Why?

“Money not backed by gold or silver is worthless paper and is a fraud committed against the people of the United States.” Critically evaluate this statement.

1. When the economy is in recession, government revenue falls due to a falling tax base. Therefore the proper role of government should be to increase taxes and cut spending so as to balance the Federal budget. Do you agree? Why?
2. “Money not backed by gold or silver is worthless paper and is a fraud committed against the people of the United States.” Critically evaluate this statement.

Read the following article.

U.S. Pork Prices Hit Multi-Year Low

MINTEC, 10 Sept 2018

Pork prices in the U.S. have fallen sharply since June, with August prices 40% lower month-over-month, which shows that pork prices are falling at a more significant rate than the historical average.

Current prices are at a multi-year low why are prices falling faster than expected?

First, pork production is currently higher than last year, with low feed costs stimulating production. Additionally, the introduction of three new packing plants in Minnesota, Iowa and Michigan in late 2017 meant herds grew to meet the new packing capacity.

Along with increasing pork volumes in the U.S. market, rising supplies of beef and poultry mean that there are vaster meat supplies to compete for consumer spending with, eventually weighing down on pork prices.

But perhaps most significant, retaliatory tariffs from China on U.S. pork are driving down prices. The export market is a substantial destination for U.S. pork. In particular, China is a top consumer of U.S. pork, this retaliatory policy has hampered U.S. export growth further.

***************************************************************************************************************************************************************************************************

Some factors could affect the demand for and supply of pork in the U.S.

Draw THREE separate demand-and-supply diagrams for each of the factors mentioned in the above article, and show their respective impacts on the market price and quantity of pork in the U.S. State clearly which factors or events are associated with the changes in demand or supply in each of your three diagrams. Briefly explain your answer.

*****Microeconomics******Please clearly answer the question with detailed steps*******I just started to learn microeconomics***please assist me, thank you