Solution-Prepare production budget and a direct materials

Prepare production budget and a direct materials budget

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Reference no: EM132520869

Acct 210 question here. Little confused on the steps, an explanation for how to remember what to do would be very nice as well.

Garver Industries has budgeted the following unit sales for 2018

January 12,000

February 8,500

March 10,000

April 11,000

May 15,000

The finished goods units on hand on December 31, 2017, was 2,500 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $5 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 25% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 9,640 pounds of raw materials on hand at December 31, 2017.

Instructions

Question 1: For January and February 2018, prepare (1) a production budget and (2) a direct materials budget. Round decimals to nearest dollar or unit.

Reference no: EM132520869

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Prepare production budget and a direct materials budget

Reference no: EM132520869

Reference no: EM132520869

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