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Make the company direct materials budget

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Reference no: EM132586161

                                                 1st Quarter                 2nd Quarter            3rd Quarter            4th Quarter

Budgeted sales (units)           8000                             7000                     6000                 7000

  • The company expects to start the first quarter with 1600 units in finished goods inventory. Management desire an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1700 units.
  • In addition the beginning raw material inventory for the first quarter is budgeted to be 3120 kilograms and the beginning accounts payable for the first quarter is budgeted to be $14820.
  • Each unit requires two kilograms of raw material that costs $4 per kilogram. Management desires to end each quarter with an inventory of raw material equal to 20%of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3140 kilograms. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Required:

Question 1) Prepare the company's production budget for the upcoming fiscal year.

Question 2) Prepare the company's direct materials budget and schedule of expected cash disbursement for materials for the upcoming fiscal year.

Reference no: EM132586161

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