Question

Fuqua Company’s sales budget projects unit sales of part 198Z of 10,300 units in January, 13,000 units in February, and 14,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $5 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2016.

Part 1

Prepare a production budget for January and February 2017.

FUQUA COMPANY Production Budget For the Quarter Ending February 28, 2017For the Month Ending January 31, 2017For the Two Months Ending February 28, 2017 For the Two Months Ending February 28, 2017For the Quarter Ending February 28, 2017For the Month Ending January 31, 2017
		January		February
Total Required UnitsExpected Unit SalesCost Per PoundUnits To Be ProducedDirect Materials PurchasesDesired Pounds in Ending Materials InventoryRequired Production UnitsTotal Materials RequiredDirect Material Pounds Per UnitTotal Cost of Direct Materials PurchasesDesired Ending Finished Goods InventoryBeginning Direct MaterialsTotal Pounds Needed for ProductionBeginning Finished Goods Inventory Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
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Required Production UnitsUnits To Be ProducedTotal Cost of Direct Materials PurchasesBeginning Finished Goods InventoryCost Per PoundTotal Pounds Needed for ProductionDesired Ending Finished Goods InventoryTotal Required UnitsDirect Material Pounds Per UnitDirect Materials PurchasesTotal Materials RequiredBeginning Direct MaterialsDesired Pounds in Ending Materials InventoryExpected Unit Sales Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
AddLess AddLess: Direct Materials PurchasesUnits To Be ProducedDirect Material Pounds Per UnitBeginning Direct MaterialsTotal Materials RequiredCost Per PoundBeginning Finished Goods InventoryExpected Unit SalesTotal Required UnitsTotal Pounds Needed for ProductionDesired Pounds in Ending Materials InventoryDesired Ending Finished Goods InventoryTotal Cost of Direct Materials PurchasesRequired Production Units Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
Beginning Finished Goods InventoryUnits To Be ProducedTotal Required UnitsExpected Unit SalesDesired Pounds in Ending Materials InventoryCost Per PoundDirect Materials PurchasesBeginning Direct MaterialsDesired Ending Finished Goods InventoryTotal Pounds Needed for ProductionRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredDirect Material Pounds Per Unit Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced

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Part 2

Prepare a direct materials budget for January 2017.

FUQUA COMPANY Direct Materials Budget For the Month Ending January 31, 2017For the Two Months Ending February 28, 2017For the Quarter Ending February 28, 2017 For the Two Months Ending February 28, 2017For the Quarter Ending February 28, 2017For the Month Ending January 31, 2017
		January
Total Cost of Direct Materials PurchasesTotal Required UnitsCost Per PoundUnits To Be ProducedDirect Material Pounds Per UnitBeginning Direct MaterialsTotal Materials RequiredDesired Ending Finished Goods InventoryRequired Production UnitsDesired Pounds in Ending Materials InventoryDirect Materials PurchasesTotal Pounds Needed for ProductionExpected Unit SalesBeginning Finished Goods Inventory Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
Required Production UnitsCost Per PoundUnits To Be ProducedTotal Materials RequiredDirect Materials PurchasesExpected Unit SalesDirect Material Pounds Per UnitDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryBeginning Finished Goods InventoryBeginning Direct MaterialsTotal Cost of Direct Materials PurchasesTotal Required UnitsTotal Pounds Needed for Production Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
Total Materials RequiredTotal Pounds Needed for ProductionUnits To Be ProducedDesired Ending Finished Goods InventoryBeginning Finished Goods InventoryBeginning Direct MaterialsDirect Material Pounds Per UnitCost Per PoundTotal Cost of Direct Materials PurchasesExpected Unit SalesRequired Production UnitsDesired Pounds in Ending Materials InventoryDirect Materials PurchasesTotal Required Units Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
AddLess AddLess: Total Cost of Direct Materials PurchasesUnits To Be ProducedDesired Ending Finished Goods InventoryTotal Required UnitsTotal Pounds Needed for ProductionBeginning Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesCost Per PoundRequired Production UnitsBeginning Direct MaterialsExpected Unit SalesTotal Materials Required Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced
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Units To Be ProducedCost Per PoundBeginning Finished Goods InventoryTotal Pounds Needed for ProductionDirect Materials PurchasesTotal Required UnitsBeginning Direct MaterialsDesired Ending Finished Goods InventoryDirect Material Pounds Per UnitDesired Pounds in Ending Materials InventoryRequired Production UnitsTotal Materials RequiredTotal Cost of Direct Materials PurchasesExpected Unit Sales Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced		$
Beginning Direct MaterialsUnits To Be ProducedBeginning Finished Goods InventoryRequired Production UnitsDesired Pounds in Ending Materials InventoryTotal Pounds Needed for ProductionCost Per PoundTotal Cost of Direct Materials PurchasesTotal Required UnitsDesired Ending Finished Goods InventoryDirect Materials PurchasesTotal Materials RequiredExpected Unit SalesDirect Material Pounds Per Unit Beginning Direct MaterialsBeginning Finished Goods InventoryCost Per PoundDesired Ending Finished Goods InventoryDesired Pounds in Ending Materials InventoryDirect Material Pounds Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required UnitsUnits To Be Produced

Answer 1

Answer-1)-

Fuqua Company
Production Budget
For the month of January & February 2017
Particulars	January	February
	Units	Units
Budgeted sales	10300	13000
Add:- Closing Inventory	13000*20%=2600	14000*20%=2800
20% of Following month sale
Less:- Opening Inventory	10300*20%=2060	2600
No. of units to be produced	10840	13200

2)-

Fuqua Company
Direct Material Purchase Budget
For the month of January 2017
Particulars	January
Production units (a)	10840
Pounds required each unit of raw material (b)	4 pounds
Total pounds required (c=a*b)	43360
Add:- Closing Inventory 40% of next month production units	52800 pounds*40%=21120 pounds
Less:- Opening Inventory	43360 pounds*40%=17344 pounds
Direct material purchase (in pounds) (d)	47136
Material cost per pound (e)	$5
Direct Material cost (f=d*e)	235680