Question

Lubriderm Corp.

01. Lubriderm Corporation has the following budgeted unit sales for the next six- month period: Month June July August September October November Unit Sales 90,000 120,000 210,000 150,000 180,000 120,000 There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Required: a. Prepare production budgets in units for July, August, and September. b. Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.

Answer 1

Given details, so Opening finished goods for June 30,000 unik. closing Inventary is maintained at 20% of next month sales. I to 2 Calculation of Production budget for July, I August & September: production units. claring stock + Rumukseses – Opening Stock. cloing stock will be 20% of next month Sales opening stock will be 20% f current month Seles. Sales 2,10,000 X 20% + 1,20,000 - 1.20,000 X20%, 42,000 +1,20,000 - 24.000 200 1,38,000 unika b) Production (August) = 150,000 X20% + 210.000 - 210,000 X 20% 30,000 +210,000 -42,000 2 1,98,000 unik. O Production (September) - 1,80,000 x 20% +1,50,000 - 1.50,000 X 20% 36,000 + 150.000 - 30,000 € 1,56,000 unik. . Budgeted Production units 138000 August : 198000 September : 156000

Date page 6) Calculation of purchases budget to 5 pounds of material acquired for each unit produced and • Joventry level is maintained at 30% f. needs of next month. --- Purchase Couly ). 198000x30%. + 138000 - 138000x 302] 85 L s (594000 +138000 -41400) x5 - 780000 pounds. Purchaser (Augat) - (156000x30% + 198000 – 198000X302) X5 | 2 (1682O + 1 8000 - 500) x5 997000 pounded for calculating purchase of September, we need to I calculate prodution from Doctober. October produshim 2 190000 X20% + 180.000 - 180000 X90C 24000 +198000 - 36000 2 186000 unik Purefones (Sept 2 - 18.6000x30% +156000 - 156000 X 30%7x3 , (55800 +15 6000 – 168o6) 15 165000x5 = 825000 pounds.

Date Page Purchase Budget Month toobud in pound in dollard July 780000 780000x8=$6240.000 Anunt 927000 927000 x 8 257416000 September 825000 h2825000X8 - $66,00,000