Prepare a production budget for playclay for the months

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Reference no: EM13334998

Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires four pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter-July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

a. The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 30% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 20,600 units.

b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 for material A135 is budgeted to be 90,000 pounds.

c. The company maintains no work in process inventories.

A sales budget for Playclay for the last six months of the year follows.


July	Budgeted Sales in Units 42,000
August	52,000
September	72,000
October	37,000
November	22,000
December	12,000

Prepare a production budget for Playclay for the months July, August, September, and October.

Prepare a direct materials budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total.

Reference no: EM13334998

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