Question

Galactic Inc. manufactures flying drone toys. Sales units for January, February, March, April and May were 700, 680, 752, 712, and 780 respectively.

Required:

1. The company’s policy for ending finished goods is 25 percent of next month's sales. Prepare a production budget for the first quarter.

2. The drone toy includes 2 LED lights, which cost $15 each. The company requires ending direct materials to be 20 percent of next month's materials requirement. Prepare a direct materials purchases budget with respect to LED lights for the first quarter.

• Required 1
• Required 2

The company’s policy for ending finished goods is 25 percent of next quarter’s sales. Prepare a production budget for the first quarter.

	Jan	Feb	Mar	1st Quarter
Budgeted Production in Units

• Required 2

The drone toy includes 2 LED lights, which cost $15 each. The company requires ending direct materials to be 20 percent of next quarter’s materials requirement. Prepare a direct materials purchases budget for the first quarter. (Do not round intermediate calculations.)

	Jan	Feb	Mar	1st Quarter
Budgeted Cost of Direct Material Purchases

Answer 1

Production Budget
	Jan	Feb	Mar	Quarter	Apr	May
Sales Units	700	680	752	2132	712	780
Add: Desired Ending Inventory	170	188	178	178	195
Total Required	870	868	930	2310	907
Less: Beginning Inventory	175	170	188	175	178
Budgeted Production in Units	695	698	742	2135	729
Direct Material Purchase Budget
	Jan	Feb	Mar	Quarter	Apr
Budgeted Production in Units	695.00	698.00	742.00	2,135.00	729.00
Raw material per unit	2.00	2.00	2.00	2.00	2.00
Total requitred for production	1,390.00	1,396.00	1,484.00	4,270.00	1,458.00
Add: Desired Ending Inventory	279.20	296.80	291.60	291.60
Total Required	1,669.20	1,692.80	1,775.60	4,561.60
Less: Beginning Inventory	278.00	279.20	296.80	278.00
Required Purchases	1,391.20	1,413.60	1,478.80	4,283.60
Cost per Unit	15.00	15.00	15.00	15.00
Budgeted Cost of Direct material Purchases	20,868.00	21,204.00	22,182.00	64,254.00