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Question - Caleb Corp. has prepared the following unit sales forecast for 2014:
Estimated ending Finished Goods Inventories are 50,000 units at December 31, 2013; 72,000 units at June 30, 2014; and 120,000 units at December 31, 2014.
In manufacturing a unit of this product, Caleb Corp. uses 3 pounds of Material A and 0.75 gallons of Material B. Materials A and B cost, respectively, $2.50 per pound and $1.80 per gallon.
The company carries no Work in Process Inventory. Ending inventories of direct material are projected as follows:
December 31, 2013
June 30, 2014
December 31 2014
Material A
240,000
270,000
284,000
Material B
90,000
70,000
76,000
Prepare a production and purchases budget for each semiannual period of 2014.
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