Question

Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have Quarter 1 Quarter 2 Quarter 3 Quarter 4 1,900 kayaks 2,600 kayaks 1,550 kayaks 1,550 kayaks Current Designs' polRY to have finished goods ending inventory in a quarter equal to 15% of the next quarter's anticipated sales, preliminary sales project ons for 2021 are 1,100 units for the first quarter and 2,600 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 285 rotomolded kayaks. powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2019, is 19,800 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits. powder used in these kayaks costs $1.20 per pound, and the finishing kits cost $160 each. Production of a single kayak requires 4 hours of time by more experienced, type I employees and 5 hours of finishing time by type II employees. The type I employees are paid $18 per hour, and the type II employees are paid $15 per hour. ng and administrative expenses for this lne are expected to be $42 per unit sold plus soooo per quarter. Manufacturing overhead is assigned at 160% of labor costs. er 03 04 Total

Answer 1

CURRENT DESIGNS

Production Budget

For the Year Ending December 31, 2020

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Expected Unit Sales	1900	2600	1550	1550	7600
+ Desired Ending Finished Goods	390	233	233	165	165
Total Required Units	2290	2833	1783	1715	7765
- Beginning Finished Goods Units	285	390	233	233	285
Required Production Units	2005	2443	1550	1482	7480

2600*15% =390

1550*15% =233

1100*15% =

CURRENT DESIGNS

Direct materials Budget

For the Year Ending December 31, 2020

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Units to be produced	2005	2443	1550	1482	7480
Pounds of polyethylene powder per unit	44	44	44	44	44
Total pounds needed for production	88220	107492	68200	65208	329120
Add: Desired ending inventory	26873	17050	16302	14575	14575
Total pounds of powder required	115093	124542	84502	79783	343695
Less: Beginning inventory of powder	19800	26873	17050	16302	19800
Pounds of polyethylene powder to be purchased	95293	97669	67452	63481	323895
Cost per Pound	1.20	1.20	1.20	1.20	1.20
Cost of polyethylene powder to order	114351.60	117202.80	80942.40	76177.20	388674.00
Cost of required finishing kits	320800	390880	248000	237120	1196800
Total costs for direct materials	435151.60	508082.80	328942.40	313297.20	1585474

Total units to be produced in the first quarter of 2021 = 1100+(2600*15%)-165 = 1325

Total pounds needed for production = 1325*44 = 58300