Question

NAKE's sales budget for basketballs for the next months: Jan Feb Mar Apr Units 500,000 600.000 400,000 700,000 They sell each basketball for $12 They want ending inventory to be 30% of the next month's sales units Beginning Finished goods inventory is 100,000 units. It takes 2 pounds of rubber to make each basketball. That is the only Direct Material Beginning Direct Material inventory is 10,000 pounds of rubber They want ending raw material inventory to be 10% of the next month's direct material need. One pound of rubber cost them $2 Each basketball takes 30 minutes of labor and labor cost is $12 per hour 1 Prepare the Sales Budget Jan Units 500,000 Feb 603,000 Mar 400,000 Revenue 2 Prepare the Unit Production Budget in Units Jan Feb Mar 3 Prepare the Raw Materials Budget for Jan-Feb in pounds and dollars Jan Feb 4 Prepare the direct labor budget for Jan, Feb and Mar Jan Feb Mar

what is raw material budget for Jan and Feb

Answer 1

Ans. 1	SALES   BUDGET
	Particulars	January	February	March
	Budgeted unit sales	500000	600000	400000
	(*) Selling price per unit	$12	$12	$12
	Total sales	$6,000,000	$7,200,000	$4,800,000
Ans. 2	PRODUCTION BUDGET
	Particulars	January	February	March
	Expected units to be sold	500000	600000	400000
	Add: Desired ending inventory units	180000	120000	210000
	Total required units	680000	720000	610000
	Less: Beginning inventory units	-100000	-180000	-120000
	Units to be produced	580000	540000	490000
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Months				Months
January	600,000 * 30%	180000		January	Given	100000
February	400,000 * 30%	120000		February	Ending inventory of January	180000
March	700,000 * 30%	210000		March	Ending inventory of February	120000
Ans. 3	Direct Materials Budget
	Particulars	January	February
	Budgeted production (units)	580000	540000
	(X) Materials requirement per unit	2	2
	Materials needed for production	1160000	1080000
	Add: budgeted ending inventory	108000	98000
	Total materials requirements	1268000	1178000
	Less: Budgeted beginning inventory	-10000	-108000
	Materials to be purchased	1258000	1070000
	(X) Direct materials per unit	$2.00	$2.00
	Total budgeted direct materials	$2,516,000	$2,140,000
	*Calculations for Ending inventory:			*Calculations for Beginning inventory:
Months				Months
January	1,080,000 * 10%	108000		January	Given	10000
February	980,000 * 10%	98000		February	Ending inventory of January	108000
	*Calculations of materials needed for production for the month of March:
	Particulars	March
	Budgeted production (units)	490000
	(X) Materials requirement per unit	2
	Materials needed for production	980000
Ans. 4	Direct Labor Budget
	Particulars	January	February	March
	Budgeted production (units)	580000	540000	490000
	(X) Direct labor hours per unit	0.50	0.50	0.50
	Total labor hours needed	290000	270000	245000
	(X) Wages rate per hour	$12	$12	$12
	Budget direct labor cost	$3,480,000	$3,240,000	$2,940,000
	*Direct labor hours per unit = 30 minutes   = 0.50 hours (i.e. 30 / 60 = 0.50)
	*Total labor hours needed = units to be produced * direct labor hours
	*Budgeted direct labor cost = Total labor hours needed * Wages rate per hour