Question 1 - Landers Company has budgeted the following unit sales:
2012 2013
Quarter Units Quarter Units
1 70,000 1 60,000
2 40,000
3 50,000
4 80,000
The finished goods inventory on hand on December 31, 2010 was 14,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of the next quarter's anticipated sales.
Instructions - Prepare a production budget for 2012.
Question 2 - Avery Company manufactures a product called Deluxe. The budgeted units to be produced are as follows:
2012 Deluxe
July 15,000
August 10,000
September 14,000
October 12,000
It takes 5 pounds of direct materials to produce the Deluxe product. It is the company's policy to maintain an inventory of direct materials on hand at the end of each month equal to 20% of the next month's production needs. Direct materials inventory on hand at
June 30 were 15,000 pounds. The cost per pound of materials is $7 for Deluxe.
Instructions - Prepare a direct materials budget for the Deluxe product for the third quarter of 2012.