Question

Your company had the following projected unit sales for 2021:

2021 quarter 1: 59,600units

2021 quarter 2: 21,300 units

2021 quarter 3: 48,300 units

2021 quarter 4: 54,500 units

2022 quarter 1: 43,400 units

-each unit produced needs 5 pounds of direct materials. The company had 29000 pounds of direct materials in its ending inventory on decmeber 31, 2019. The company prefers to keep 15000 pounds of direct materals in ending inventory.

-the company had 6500 units in its ending inventory of december 31, 2019. the company prefers to keep 15% of the upcoming quarters projected sales volume in its ending inventory for curret quarter

-each pound of direct materials costs $3,000

-selling price per unit is $36

Prepare a production budget for quarter 1 of 2021 (result should be I units)

AND prepare a direct materials purchase budget for quarter 1 of 2021 (result should be in $)

Answer 1

Production Budget
	Quarter 1
Beginning sales	59,600
Add: Ending finished goods inventory	3,195 (21,300*15%)
Less: Beginning finished goods inventory	8,850 (59,600*15%)
Budgeted production	53,945

Direct Material Purchases Budget
	Quarter 1
Budgeted production	53,945
Direct material required per unit (in pounds)	5
Total direct material needed for production	269,725
Add: Desired ending inventory	15,000
Total material units required	284,725
Less: Beginning inventory	15,000
Direct material purchases	269,725
Cost per pound	$3,000
Cost of direct material purchases	$809,175,000