FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited
has developed the following estimates for unit sales in the upcoming year.
Budgeted unit sales
Required production of lights
Number of bulbs per light
Total production needs-bulbs
First
Quarter
24,700
Total needs-bulbs
Second
Quarter
22,600
Each light requires two separate LED bulbs, each of which costs $2. To ensure enough LED bulbs are on hand to support short-term
production if a problem arises with the sole supplier, Fortin Limited maintains an ending inventory of 10% of the following quarter's
production needs. A total of 4,800 LED bulbs will be on hand to start the first quarter of the upcoming fiscal year. Management expects
sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year.
Required purchases-bulbs
Total cost of purchases
Required:
Prepare a direct materials purchases budget for LED bulbs, by quarter and in total, for the upcoming fiscal year. At the bottom of your
budget, show the dollar amount of purchases for each quarter and for the year in total. Hint: Fortin Limited maintains an ending
inventory of both raw materials and finished goods of 10% of the following quarter's production needs. Before preparing a direct
materials budget, the production budget must be prepared.
Third
Quarter
20,300
FORTIN LIMITED
Direct Materials Budget - Year 2
First
0
Fourth
Quarter
22,100
Second
Quarter
0
Third
Fourth
Year
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Transcribed Image Text:Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited has developed the following estimates for unit sales in the upcoming year. Budgeted unit sales Required production of lights Number of bulbs per light Total production needs-bulbs First Quarter 24,700 Total needs-bulbs Second Quarter 22,600 Each light requires two separate LED bulbs, each of which costs $2. To ensure enough LED bulbs are on hand to support short-term production if a problem arises with the sole supplier, Fortin Limited maintains an ending inventory of 10% of the following quarter's production needs. A total of 4,800 LED bulbs will be on hand to start the first quarter of the upcoming fiscal year. Management expects sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year. Required purchases-bulbs Total cost of purchases Required: Prepare a direct materials purchases budget for LED bulbs, by quarter and in total, for the upcoming fiscal year. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total. Hint: Fortin Limited maintains an ending inventory of both raw materials and finished goods of 10% of the following quarter's production needs. Before preparing a direct materials budget, the production budget must be prepared. Third Quarter 20,300 FORTIN LIMITED Direct Materials Budget - Year 2 First 0 Fourth Quarter 22,100 Second Quarter 0 Third Fourth Year
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