Flounder Industries has budgeted the following unit sales: 2022 January February March April May Units 10,500 8,000 9,000 11,000 15,000 The finished goods units on hand on December 31, 2021 was 2,100 units. Each unit of finished goods requires 2 pounds of direct materials that are estimated to cost an average of $5 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. The company also has a policy of maintaining a direct materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 6,000 pounds of direct materials on hand at December 31, 2021.

Flounder Industries has budgeted the following unit sales: 2022 January February March April May Units 10,500 8,000 9,000 11,000 15,000 The finished goods units on hand on December 31, 2021 was 2,100 units. Each unit of finished goods requires 2 pounds of direct materials that are estimated to cost an average of $5 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. The company also has a policy of maintaining a direct materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 6,000 pounds of direct materials on hand at December 31, 2021.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 2CE: Refer to Cornerstone Exercise 8.1, through Requirement 1. FlashKick requires ending inventory of...

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