Question

Trebblehorn Industries has adopted the following sales budget for the first 3 months of 2017. Month Units January 11,000 February 15,000 March 13,000 Management requires 30% of next month sales to be in ending inventory. Each unit requires 5 pounds of raw materials costing $3 per pound. Management wants to have a raw materials inventory at the end of the month equal to 35% of next month's production requirements. April's expected sales are 12,000 with a total of 13,500 required for production Based off this information prepare a production and direct materials budget.

Answer 1

PRODUCTION BUDGET
			Jan	Feb	Mar	QUARTER
Budgeted Sales Units			11,000	15,000	13,000	39,000
Add: Desired Ending Finished inventory			4,500	3,900	3,600	3,600
Total Needs			15,500	18,900	16,600	42,600
Less: Beginning Finished Inventory			3,300	4,500	3,900	3,300
Required Production in units			12,200	14,400	12,700	39,300
RAW MATERIAL PURCHASE BUDGET
			Jan	Feb	Mar	QUARTER	April
Budgeted Production units			12,200	14,400	12,700	39,300	13,500
Raw material per unit			5	5	5	5	5
Total Requirement			61,000	72,000	63,500	196,500	67,500
Add: Desired Ending Inventory			25,200	22,225	23,625	23,625
Total needs			86,200	94,225	87,125	220,125
Less: Beginning Inventory			21,350	25,200	22,225	21,350
Purchase Units			64,850	69,025	64,900	198,775
Cost price per unit			3.00	3.00	3.00	3.00
Budgeted Purchase in $			194,550	207,075	194,700	596,325