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Cost Accounting
Lubriderm Corporation has the following budgeted sales for the next two months:
Month Unit Sales Selling Price per unit
June 90,000 $100
July 120,000 $100
There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have a target ending inventory of finished products that equal 20% of the budgeted unit sales for the next month.
Five pounds of materials are required for each unit produced. Each pound of material costs $8. Target ending inventory for materials is 20,000 pounds and material inventory on June 1 was 15,000 pounds.
Required:
Prepare the following budgets for June;
a. Revenue
b. Production
c. Material usage
d. Material purchase ( how many pounds of material should be purchased and what is the cost of purchases)
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