FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Prepare Bates & Hill's direct materials purchases budget for the first quarter. (Enter price per pound to 2 decimal places, e.g. 52.75.)
Marcy Jones, Bates & Hill Fabricators' purchasing manager, has just received the company's production budget for the first quarter.
|
January
|
February
|
March
|
Quarter
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Budgeted unit sales
|
25,000 | 28,000 | 32,000 | 85,000 | |||||
|
+ Budgeted ending inventory
|
5,600 |
|
6,400 |
|
6,800 |
|
6,800 | ||
|
Total units required
|
30,600 | 34,400 | 38,800 | 91,800 | |||||
|
- Beginning inventory
|
3,200 | 5,600 | 6,400 | 3,200 | |||||
|
Budgeted production
|
27,400 |
|
28,800 |
|
32,400 |
|
88,600 |
Budgeted sales for April is 34,000 units and for May is 26,000 units.
Each brick requires 6 pounds of clay, and Marcy expects to pay $1.50 per pound of clay in the coming year. Company policy requires an ending direct materials inventory each month that will meet 10% of the following month's production needs. Company policy requires an ending finished goods inventory each month that will meet 20% of the following month’s sales volume. Marcy expects to have 15,000 pounds of clay at a cost of $22,500 in inventory at the beginning of the year.
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