Question

Problems: 1. Benliver, Inc. manufactures and distributes a number or products to retailers. One of these products. Super Jetdry, requires two pounds of material R2D8 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter - July August, and September. Peak sales of Super Jetdry occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements: a. The finished goods inventory on hand at the end of each month must be equal to 3,000 units plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 12.600 units. b. The raw materials inventory on hand at the end of the month must be equal to 40% of the following month's production needs for raw materials. The raw materials inventory on June 30 for material R2D8 is budgeted to be 40.320 pounds. The cost per pound of raw material is $3.50. c. The company maintains no work in process inventories and the selling price per unit of Super Jet dry is $47.50. A sales budget for Super Jet dry for the last six months of the year follows: July August September Budgeted Sales in Units 48.000 60.000 75,000 40.000 30,000 20,000 October November December Required: a. Prepare a sales budget for Super Jet dry for the months of July, August, and September, and the quarter in total. b. Prepare a production budget for Super Jetdry for the months of July, August, and September and the quarter in total. c. Prepare a direct material purchases budget showing the quantity and cost of material R2D8 to be purchased for July, August, and September and for the quarter in total.

Answer in excel

Answer 1

Calculation July Aug Sep Benliver Inc. Sales Budget Req1 Sales in Units Price Total sales revenue July 48,000 47.50 2,280,000 Aug 60,000 47.50 2,850,000 Sep 75,000 47.50 3,562,500 Quarter 183,000 47.50 8,692,500 Sales in units* Price July July Aug Sep Oct Production budget Req2 Sales in Units Ending Inventory Needed Less Beginning Inventory Units to be produced =3,000+(60,000*20%) =3,000+75,000*20%) =3,000+(40,000*20%) =3,000+(30,000*20%) 48,000 15,000 63,000 12,600 50,400 Aug 60,000 18,000 78,000 15,000 63,000 Sep Sen Oct 75,000 40,000 11,000 9,000 86,000 49,000 18,000 11,000 68,000 38,000 Quarter 183,000 11,000 194,000 12,600 181,400 End Inv of July End Inv of Aug Sep July Aug Sep Oct July 50,400 Aug 63,000 Oct 38,000 Quarter 181,400 68,000 2 76,000 =38,000*2 pounds Direct Materials Purchases budget Req3 Production in Units Pounds Required Ending Inventory Needed Less Beginning Inventory Purchases Cost DM Cost =50,400*2 pounds =126,000*40% =63,000*2 pounds =136,000*40% =68,000*2 pounds =76,000*40% 100,800 50,400 151,200 40,320 110,880 3.50 388,080 126,000 54,400 180,400 50,400 130,000 3.50 455,000 136,000 30,400 166,400 54,400 112,000 3.50 392,000 362,800 30,400 393,200 40,320 352,880 3.50 1,235,080 End Inv of July End Inv of Aug Note: Oct month Production budget details are only calculated for Ending Inventory of Direct Materials as its 40% of following month's production needs So we need Oct month's production needs to calculate Direct Materials Ending Inventory of Sep