Question

# Problem 9-4 Karam Inc. has compiled the following data in order to put together their first...

Problem 9-4

Karam Inc. has compiled the following data in order to put together their first quarter operating budget for 2011:

 January February March April Sales (units) 35,000 31,000 38,000 29,000

Each unit requires three hours of direct labor.

Karam sells each unit for \$95.
Company policy is to have 30 percent of next month's sales (in units) in ending finished goods inventory.
Company policy is to have 40 percent of next month's production needs in ending raw materials inventory. The production needs for April is 95,500.
It takes three pounds of material to produce each unit and the cost is \$2.75/pound.

Required:

A. Prepare a sales budget for the January, February and March and for the first quarter in total.

 Karam Inc. Sales Budget For the Quarter Ended March 31, 2011 January February March Total Sales in units Unit selling price \$ \$ \$ \$ Budgeted sales \$ \$ \$ \$

B. Prepare a production budget for January, February and March and for the first quarter in total.

 Karam Inc. Production Budget For the Quarter Ended March, 31, 2011 January February March Total Sales in units (given) Desired ending inventory Total needs Less: Beginning inventory Units to be produced

C. Prepare a direct materials purchases budget for January, February and March and for the first quarter in total.

 Karam Inc. Production Budget For the Quarter Ended March 31, 2011 January February March Total Units to be produced Direct materials per unit Production needs Desired ending inventory Total needs Less: Beginning inventory Direct materials to be purchased Cost per pound \$ \$ \$ \$ Total purchase cost \$ \$ \$ \$

P

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