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Refer to Cornerstone Exercise 8.2 for the production budgets for practice balls and match balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick’s policy is that 20 percent of the following month’s production needs for raw materials be in ending inventory. Beginning inventory in January for all raw materials met this requirement.
Required:
- 1. Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year.
- 2. What if FlashKick decreased the ending inventory percentage to 15 percent of the next month’s production needs? What impact would that have on the direct materials purchases budgets prepared in Requirement 1?
Refer to Cornerstone Exercise 8.1, through Requirement 1. FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales. Beginning inventory in January was 3,100 practice soccer balls and 400 match soccer balls.
Required:
- 1. Construct a production budget for each of the two product lines for FlashKick Company for the first three months of the coming year.
- 2. What if FlashKick wanted a production budget for the two product lines for the month of April? What additional information would you need to prepare this budget?
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Chapter 8 Solutions
Cornerstones of Cost Management (Cornerstones Series)
- Rehydrator makes a nutrition additive and expects to sell 3,000 units in January, 2,000 in February, 2,500 in March, 2,700 in April. and 2,900 in May. The required ending inventory is 20% of the next months sales, and the beginning inventory on January 1 was 600 units. Prepare a production budget for the first four months of the year.arrow_forwardEach unit requires 2 pounds of direct materials, which cost $5 per pound. The company's policy is to maintain direct materials inventory equal to 30% of the next month's direct materials requirement. As of June 30, the company has 3,120 pounds of direct materials in inventory, which complies with the policy. Prepare a direct materials budget for July. MIAMI SOLAR Direct Materials Budget For Month Ended July 31 Budget production (units) Materials needed for production (lbs.) Total materials requirements (lbs.) Materials to be purchased (lbs.) Budgeted cost of direct materials purchases 5,200arrow_forwardMagnolia, Inc., manufactures bedding sets. The budgeted production is for 20,500 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 3,040 yards with the desired ending balance of 3,900 yards of material. If the material costs $8.50 per yard, determine the materials budget for the year. $arrow_forward
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- Bieber Company produces floor mats used in gyms and dojos. The sales budget for four months of the year is as shown in the table. Company policy requires that ending inventories for each month be 15 percent of next month’s sales. At the beginning of April, the beginning inventory of mats met that policy. 1.Compute for the number of units produced for the month of May. 2.Compute for the number of units produced for the month of July.arrow_forwardThunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25% of next month's materials requirements Prepare a Direct Materials Budget. (When entering answers in the direct materials budget, use the production budget for your cell references. Enter all values as positive--without a minus sign--in row 31.) 2018 Jan Feb Q1 Total April Budget #3: Direct Materials Budget Budgeted units to be produced Mar 30,800 25,200 19,200 2.00 Direct materials (pounds) per unit 2.00 Direct materials needed for production 50,400 38,400 12,600 2.00 61,600 8,600 Plus: Desired direct materials in ending inventory (pounds) 15,400 Total direct materials needed 51,000 65,800 70,200 Less: Direct materials in beginning inventory (pounds) 9,500 12,600 15,400 Budgeted purchase of direct materials 41,500 53,200 54,800 Direct material…arrow_forwardPreston, Incorporated, manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 280 units in July and 420 units in August. Each unit requires 11 feet of wood at a cost of $1.00 per foot. Preston wants to always have 260 feet of wood on hand in materials inventory. Compute Preston's direct materials purchases budget for July and August.arrow_forward
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