Sales inMonthUnitsApril3,440May3.885June4,6204,1353,970JulyAugustCroy's finished goods inventory policy is to have 50 percent of the next month's sales on hand at the end of each month. Directmaterials cost $2.50 per pound, and each unit requires 2 pounds. Direct materials inventory policy is to have 50 percent of the nextmonth's production needs on hand at the end of each month. Direct materials on hand at March 31 totaled 3,663 pounds.Required:1. Determine budgeted production for April, May, and June.2. Determine budgeted cost of direct materials purchased for April and May.

Step 1: Construct the production budgetTotal needs = Budgeted sales + Desired ending…

Answered: Sales in Month Units April 3,440 May…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2CMA

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Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Ranger Industries has provided the following information at June 30: Other information: Average selling price, 196 Average purchase price per unit, 110 Desired ending inventory, 40% of next months unit sales Collections from customers: In month of sale20% In month after sale50% Two months after sale30% Projected cash payments: Inventory purchases are paid for in the month following acquisition. Variable cash expenses, other than inventory, are equal to 25% of each months sales and are paid in the month of sale. Fixed cash expenses are 40,000 per month and are paid in the month incurred. Depreciation on equipment is 2,000 per month. REQUIREMENT You have been asked to prepare a master budget for the upcoming quarter (July, August, and September). The components of this budget are a monthly sales budget, a monthly purchases budget, a monthly cash budget, a forecasted income statement for the quarter, and a forecasted September 30 balance sheet. The worksheet MASTER has been provided to assist you. Ranger Industries desires to maintain a minimum cash balance of 8,000 at the end of each month. If this goal cannot be met, the company borrows the exact amount needed to reach its goal. If the company has a cash balance greater than 8,000 and also has loans payable outstanding, the amount in excess of 8,000 is paid to the bank. Annual interest of 18% is paid on a monthly basis on the outstanding balance.
How many units are in beginning inventory it 32,000 units are budgeted for sales, 35,000 units are produced, and the desired ending inventory is 9,000 units?
When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
Blue Book printing is budgeting sales of 25,000 units and already has 5,000 in beginning inventory. How many units must be produced to also meet the 7,000 units required in ending inventory?
PB1. 7.2 Lens & Shades sells sunglasses for $37 each and is estimating sales of 21,000 units in January and 19,000 in February. Each lens consists of 2.00 mm of plastic costing $2.50 per mm, 1.7 oz of dye costing $2.80 per ounce, and 0.50 hours direct labor at a labor rate of $18 per unit. Desired inventory levels are: Prepare a sales budget, production budget, direct materials budget for silicon and solution, and a direct labor budget.
JNT Store expets to generate the following sales for the next three months: August September October Expected sales 460,000 580,000 620,000 JNT's cost of goods sold is 60% of sales dollars. At the end of each month, BW wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. What dollar amount of desired ending merchandise inventory ojnt in September?
Title 1. You are inventory manager of Diego Supplies Inc. You computed the EOQ to be 500 units. Annual... Description </o:p> 1. You are inventory manager of Diego Supplies Inc. You computed the EOQ to be 500 units. Annual demand for the company is 5,000 units, and holding cost is $4 per unit. What is the ordering cost? 2. G-Tech’s monthly demand is 250 units. You are in charge of the inventory department. You know that the holding cost is $60 per unit and ordering cost is $100 per order. What is the EOQ? What is the number of orders per year? What is the annual holding cost? If lead time L is one week and demand rate is 60 units per week, what is the ROP?
Catulla Corporation predicts the following sales in units for the coming four months April May 240 200 June July 300 sales in units Each moners ending Finished Goods Inventory in units should be 40% of the next month's sales Mech 21 Fished Goods inventory a 00 unts A freshed unit requires five pounds of dract material 8 at a cost of $2.00 per pound. The March 31 Raw Materials inventory has 200 pounds of direct matal 8. Each moners ending Raw Materials twentary should be 30% of the following months production needs The budgeted purchases of pounds of direct material during May should be O 1422 pounds 4xpr 210 pan
6. Karmee’s cost of goods sold averages 40 percent of the sales value. Karmee’s objective is to maintain a target inventory equal to 30 percent of the next month’s sales. Purchases of merchandise for resale are paid for in the month following the sale. Calculate for the purchases of merchandise that Karmee Company will need to make during February.
1) Gertrude Products expects the following sales of its single product: Units July 6,000 August 6,500 September 7,200 October 7,800 November 8,800 Gertrude desires an ending finished goods inventory to be equal to 20% of the next month's sales needs. July 1 inventory is projected to be 1,000 units. Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B. July 1 materials inventory includes 10,600 pounds of Chemical A and 76,000 pounds of Chemical B. Gertrude desires to maintain a Chemical A inventory equal to 30% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs. a Prepare a production budget for Gertrude for July, August and September. a. Production July August September Qtr. Total Sales +Ending Inv. -Beginning Inv. Production b. Prepare a direct materials…

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