FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following: Practice Balls Match Balls Units Selling Price Units Selling Price January 45,000 $8.95 6,900 $17.10 February 57,000 $8.95 8,200 $17.10 March 88,000 $8.95 12,000 $17.10 April 100,000 $8.95 17,500 $17.10 FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales. Beginning inventory in January was 9,000 practice soccer balls and 1,380 match soccer balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 2 ounces of glue. FlashKick’s policy is that 20 percent of the following month’s production needs for raw materials be in ending inventory. Beginning inventory in January for all raw materials met this requirement. Required: Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year. If required, round your answers to the nearest cent. Direct materials purchases budget for polyvinyl chloride panels: FlashKick Company Direct Materials Purchases Budget - Polyvinyl Chloride Panels For January and February Polyvinyl chloride panels: January February Units produced fill in the blank fill in the blank Direct materials per unit fill in the blank fill in the blank Direct materials for production fill in the blank fill in the blank Desired ending inventory fill in the blank fill in the blank Total needed fill in the blank fill in the blank Less: Beginning inventory fill in the blank fill in the blank Direct materials purchases fill in the blank fill in the blank Feedback The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. The purchases amount can be determined by considering beginning and ending (desired) inventory amounts. Also, consider expected usage. Direct materials purchases budget for bladder and valve: FlashKick Company Direct Materials Purchases Budget - Bladder and Valve For January and February Bladder and valve: January February Units produced fill in the blank fill in the blank Direct materials per unit fill in the blank fill in the blank Direct materials for production fill in the blank fill in the blank Desired ending inventory fill in the blank fill in the blank Total needed fill in the blank fill in the blank Less: Beginning inventory fill in the blank fill in the blank Direct materials purchases fill in the blank fill in the blank Feedback The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. Purchases = Expected usage + Desired ending inventory of direct materials – Beginning inventory of direct materials Direct materials purchases budget for glue: FlashKick Company Direct Materials Purchases Budget - Glue For January and February Glue: January February Units produced fill in the blank fill in the blank Direct materials per unit fill in the blank fill in the blank Direct materials for production fill in the blank fill in the blank Desired ending inventory fill in the blank fill in the blank Total needed fill in the blank fill in the blank Less: Beginning inventory fill in the blank fill in the blank Direct materials purchases fill in the blank fill in the blank
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Direct Materials Purchases Budget
FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following:
| Practice Balls | Match Balls | ||||||
| Units | Selling Price | Units | Selling Price | ||||
| January | 45,000 | $8.95 | 6,900 | $17.10 | |||
| February | 57,000 | $8.95 | 8,200 | $17.10 | |||
| March | 88,000 | $8.95 | 12,000 | $17.10 | |||
| April | 100,000 | $8.95 | 17,500 | $17.10 |
FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales. Beginning inventory in January was 9,000 practice soccer balls and 1,380 match soccer balls.
Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 2 ounces of glue. FlashKick’s policy is that 20 percent of the following month’s production needs for raw materials be in ending inventory. Beginning inventory in January for all raw materials met this requirement.
Required:
Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year. If required, round your answers to the nearest cent.
Direct materials purchases budget for polyvinyl chloride panels:
| FlashKick Company | ||
| Direct Materials Purchases Budget - Polyvinyl Chloride Panels | ||
| For January and February | ||
| Polyvinyl chloride panels: | January | February |
| Units produced | fill in the blank | fill in the blank |
| Direct materials per unit | fill in the blank | fill in the blank |
| Direct materials for production | fill in the blank | fill in the blank |
| Desired ending inventory | fill in the blank | fill in the blank |
| Total needed | fill in the blank | fill in the blank |
| Less: Beginning inventory | fill in the blank | fill in the blank |
| Direct materials purchases | fill in the blank | fill in the blank |
The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. The purchases amount can be determined by considering beginning and ending (desired) inventory amounts. Also, consider expected usage.
Direct materials purchases budget for bladder and valve:
| FlashKick Company | ||
| Direct Materials Purchases Budget - Bladder and Valve | ||
| For January and February | ||
| Bladder and valve: | January | February |
| Units produced | fill in the blank | fill in the blank |
| Direct materials per unit | fill in the blank | fill in the blank |
| Direct materials for production | fill in the blank | fill in the blank |
| Desired ending inventory | fill in the blank | fill in the blank |
| Total needed | fill in the blank | fill in the blank |
| Less: Beginning inventory | fill in the blank | fill in the blank |
| Direct materials purchases | fill in the blank | fill in the blank |
The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. Purchases = Expected usage + Desired ending inventory of direct materials – Beginning inventory of direct materials
Direct materials purchases budget for glue:
| FlashKick Company | ||
| Direct Materials Purchases Budget - Glue | ||
| For January and February | ||
| Glue: | January | February |
| Units produced | fill in the blank | fill in the blank |
| Direct materials per unit | fill in the blank | fill in the blank |
| Direct materials for production | fill in the blank | fill in the blank |
| Desired ending inventory | fill in the blank | fill in the blank |
| Total needed | fill in the blank | fill in the blank |
| Less: Beginning inventory | fill in the blank | fill in the blank |
| Direct materials purchases | fill in the blank | fill in the blank |
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