On January 1, 2020, the Sheridan Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,200; 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: 7,630 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. Prepare a production budget by quarters for the 6-month period ended June 30, 2020. SHERIDAN COMPANY Production Budget Quarter 1 2 Six Months : : Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020. SHERIDAN COMPANY Direct Materials Budget Quarter 1 2 Six Months : : $ $ $ $ $
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Ответ:
Answer and Explanation:
The preparation of the production budget and direct material budget is presented below:
As per the data given in the question,
Sheridan company
Production Budget
For six months ending June 30,2020
Quarter
1 2 six months
Expected units sales 5,200 6,700
Add: units of desired ending finished goods 1,675 1,750
Total units 6,875 8,450
Less: Finished good units 1,300 1,675
Required units for production 5,575 6,775 12,350
Quarter 2 required finished goods = 25% × Unit sales of quarter 3
= 25% × 7,000
= 1,750
Sheridan company
Direct material Budget
For six months ending June 30,2020
Quarter Quarter
1 2 Six months 3
Units to be produced 5,575 6,775 7,630
Direct material per unit 3 3 3
Total need for production 16,725 20,325 22,890
Add: Required ending direct material 8,130 8,856
(20,325 × 40%) (22,890 × 40%)
Total material required 24,855 29,181
Less: Beginning direct material 6,690 8,130
(16,725 × 40%)
Direct material purchased 18,165 21,051
Cost per pound 4.00 4.00
Total cost $72,660 $84,204 $156,864
Ответ:
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