Ask Question
24 August, 21:55

Marigold Company's sales budget projects unit sales of part 198Z of 10,300 units in January, 12,000 units in February, and 13,500 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $4 per pound. Marigold 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 on December 31, 2016.

a. Prepare a projected budget for Jan and Feb 2017

b. Prepare a direct material budget for Jan 2017

+4
Answers (1)
  1. 24 August, 22:38
    0
    Production Budget Jan 10,640 Feb 12,300

    Direct Materials Budget Jan 45216

    Explanation:

    Production Budget = Sales + Desired Ending Inventory - Opening Inventory

    The ending inventory for one month is the opening inventory for the next. We calculate the ending inventory for

    Jan = 20% 0f 12000 units = 2400

    Feb = 20% of 13500 units = 2700

    Marigold Company

    Production Budget

    Jan Feb March

    Sales Units 10,300 12000 13500

    Add Desired

    Ending Inventory 2400 2700

    Less Opening 2060 2400 2700

    Production Budget 10,640 12,300

    Direct Materials Budget = Production Budget in pounds + Direct Materials Desired Ending Inventory - Opening Inventory Direct Materials

    The ending inventory for one month is the opening inventory for the next. We calculate the ending inventory for

    Jan = 40% 0f 49,200 units = 19680

    Dec = 40% 0f 42,560 units = 17024

    Dec Ending Inv = Jan opening Inventory

    Marigold Company

    Direct Materials Budget

    Jan Feb

    Production Units 10,640 12300

    Pounds per unit 4 4

    Production pounds 42,560 49,200

    Add Desired

    Ending Inventory 19,680

    Less Opening 17024 19680

    Direct Materials Budget 45216
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Marigold Company's sales budget projects unit sales of part 198Z of 10,300 units in January, 12,000 units in February, and 13,500 units in ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers