On January 1, 2022, the Sheffield Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2022. Sales units: Ending raw materials inventory: Ending finished goods inventory: Third-quarter production: First quarter 7,300; second quarter 8,760; third quarter 10,220. 40% of the next quarter's production requirements. 25% of the next quarter's expected sales units. 10,570 units. The ending raw materials and finished goods inventories at December 31, 2021, follow the same percentage relationships to production and sales that occur in 2022. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.
On January 1, 2022, the Sheffield Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2022. Sales units: Ending raw materials inventory: Ending finished goods inventory: Third-quarter production: First quarter 7,300; second quarter 8,760; third quarter 10,220. 40% of the next quarter's production requirements. 25% of the next quarter's expected sales units. 10,570 units. The ending raw materials and finished goods inventories at December 31, 2021, follow the same percentage relationships to production and sales that occur in 2022. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 4E: Prepare a cost of goods sold budget for the Crest Hills Manufacturing Co. for the year ended...
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Concept explainers
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.
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Transcribed Image Text:On January 1, 2022, the Sheffield Company budget committee has reached agreement on the following data for the 6 months ending
June 30, 2022.
Sales units:
Ending raw materials inventory:
Ending finished goods inventory:
Third-quarter production:
First quarter 7,300; second quarter 8,760; third quarter 10,220.
40% of the next quarter's production requirements.
25% of the next quarter's expected sales units.
10,570 units.
The ending raw materials and finished goods inventories at December 31, 2021, follow the same percentage relationships to
production and sales that occur in 2022. Three pounds of raw materials are required to make each unit of finished goods. Raw
materials purchased are expected to cost $4 per pound.
Transcribed Image Text:Expected Unit Sales
Add
V: Desired Ending Finished Goods Unit
Total Required Units
Less v: Beginning Finished Goods Unit
Required Production Units
Desired Ending Direct Materials (Pounds)
Total Cost of Direct Materials Purchases
SHEFFIELD COMPANY
Production Budget
For the Six Months Ending June 30, 2022
$
7300
2190
9490
1825 i
7665
OFILITICSSZA
Quarter
WALLE
Direct Materials Budget
Quarter
$
$
2
8760
2
2555
11315
2190
i
9125
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