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17 February, 07:36

Fuqua Company's sales budget projects unit sales of part 198Z of 10,100 units in January, 12,600 units in February, and 13,700 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 projected budget for Jan and Feb 2020.

B: Prepare a direct material budget for Jan 2020.

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  1. 17 February, 10:56
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    Fuqua Company

    Production budget

    For the months of January and February 2020

    January February

    Projected sales 10,100 12,600

    Desired ending inventory 2,520 2,740

    Required production 12,620 15,340

    Beginning inventory - 2,020 - 2,520

    Units to be produced 10,600 12,820

    Fuqua Company

    Direct Materials budget

    For the month of January 2020

    January

    Units to be produced 10,600

    Direct materials per unit 3

    Direct materials needed 31,800

    Desired ending inventory 15,384

    Beginning inventory - 12,720

    Direct materials purchases 34,464

    Cost per pound $4

    Direct materials' cost $137,856
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