Question

Production and Purchases Budgets At the beginning of October, Comfy Cushions had 2,200 cushions and 13,500...

Production and Purchases Budgets
At the beginning of October, Comfy Cushions had 2,200 cushions and 13,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Month

Sales

October

11,000 Cushions

November

13,000 Cushions

December

16,000 Cushions

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required
a. Prepare a production budget for October and November.
Do not use a negative sign with your answers.

Great Cushions Production Budget for months October, November and December

Months

October

November

December

Unit Sales

Answer

Answer

Answer

Desired ending inventory

Answer

Answer

No answer needed here

Finished goods requirements

Answer

Answer

No answer needed here

Less beginning inventory

Answer

Answer

No answer needed here

Production requirements

Answer

Answer

No answer needed here

b. Prepare a purchases budget in units and dollars for October.
Do not use a negative sign with your answers.

Great Cushions Purchases Budget for months October

Months

October

November

                                              

Production requirements

Answer

Answer

Desired ending inventory

Answer

No answer needed here

Raw materials requirements

Answer

No answer needed here

Less beginning inventory

Answer

No answer needed here

                    

Purchase requirements (units)

Answer

No answer needed here

Purchase requirements (in dollars)

Answer

No answer needed here
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Homework Answers

Answer #1
A
Production Budget: Oct Nov Dec
Unit Sales 11000 13000 16000
Add: Desired Closing Units (Next Month Production*20%) 2600 3200
Finished Goods Requirement 13600 16200
Less: Opening Inventory 2200 2600
Production Requirement 11400 13600
B Production Budget: Oct Nov
Production Requirement 11400 13600
Add: Desired Closing Units (Next Month Production*25%) 3400
Raw Material Requirement 14800
Less: Opening Inventory 13500
Purchase Requirement in Units (Units*5Pounds) 6500
Purchase Requirement in Dollars(6500*0.90) 5850
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