Question

On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the months ending June 30, 2020. Sales units: First quarter 6,000 second quarter 6.900: third quarter 7400 Ending raw materials inventory: 40% of the next quarter's production requirements Ending finished goods inventary: 25% of the next quarter's expected sales units. Third-quarter production: 7.840 units. The ending raw materials and finished goods Inventaries at December 31, 2019 follow the same percentage relationships to production and les that occur in 2020.4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound. Your Answer Correct Answer Prepare a production budget by quarters for the 6-month period ended June 30, 2020. HARDIN COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter Six Months 6,900 1,850 Expected Unit Sales Add : Desired Ending Finished Goods Unit : Total Required Units Less : Beginning Finished Goods Unit Required Production Units 4,000 1,725 7,725 1,500 6,225 8,750 1,725 i 7,025 1250 Prepare a direct materials budget by quarters for thno-month perind ended June 20, 2020. HARDIN COMPANY Direct Materials Budget Quarter Six Months

Answer 1

Ans. 1	HARDIN COMPANY
	Production Budget
	For the Six Months Ending June 30, 2020
	Particulars	1	2	Six Months
	Expected units to be sold	6000	6900
	Add: Desired ending inventory units	1725	1850
	Total required units	7725	8750
	Less: Beginning inventory units	-1500	-1725
	Units to be produced	6225	7025	13250
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Quarter				Quarter
1	6,900 * 25%	1725		1	(calculated as follows)	1500
2	7,400 * 25%	1850		2	Ending inventory of Q1	1725
	Beginning finished goods invenotry of current quarter =   Ending inventory of previous quarter
	Quarter 1 beginning inventory = Ending inventory of quarter 4 of 2019 = 25% of first quarter of 2020 sales
		6,000 * 25%
		1500	units
Ans. 2	HARDIN COMPANY
	Direct Materials Budget
	For the Six Months Ending June 30, 2020
	Particulars	1	2	Six Months
	Budgeted production (units)	6225	7025
	(X) Materials requirement per unit	4	4
	Materials needed for production	24900	28100
	Add: budgeted ending inventory	11240	12544
	Total materials requirements	36140	40644
	Less: Budgeted beginning inventory	-9960	-11240
	Materials to be purchased	26180	29404
	(X) Direct materials per unit	$5	$5
	Total budgeted direct materials	$130,900	$147,020	$277,920
	*Calculations for Ending inventory:			*Calculations for Beginning inventory:
Quarter			Quarter
1	28,100 * 40%	11240	1	(calculated as follows)	9960
2	31,360 * 40%	12544	2	Ending inventory of Q1	11240
	Particulars	Third quarter
	Budgeted production (units)	7840
	(X) Materials requirement per unit	4
	Materials needed for production	31360
	Quarter 1 beginning inventory = Ending inventory of quarter 4 of 2019 = 40% of first quarter of 2020 Materials needed for production
		24,900 * 40%
		9960