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Prepare quarterly production budget

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Question - Productions and related Budgets

Water from Heaven Manufactures Pty Ltd produces plastic rainwater tanks for household use. The following information has been gathered so that a production budget, a direct materials budget and a direct labor budget for part of 2014 can be prepared.

The materials and labor requirements per tank are as follows.

Quantity Cost

Plastic (weather resistant) 50 kilograms $12 per kilogram

Plastic pipes 2.2 metres 2 per metre

Moulding and welding 2 hours 22 per hour

Finishing labor 0.5 hours 18 per hour

Management prefers a finished goods ending inventory for each quarter that equals 25% of expected sales for the next quarter. Also the ending inventory balance of direct materials should equal 25% of the next quarter's production requirements. The inventory balances on 1 January 2014 forecast as:

Plastic (weather resistant) 266,250 kilograms

Plastic pipes 11,715 metres

Tanks 5100

The forecast quarterly sales in units are:

March 2014 20400

June 2014 24000

September2014 22800

December2014 16500

Required -

A. Prepare quarterly production budget, in units only, for the March, June and September quarters for 2014.

B. Prepare direct materials budget for the March and June quarters of 2014 in both units and dollars.

C. Prepare direct labor budget for the March and June quarters of 2014.

Reference no: EM132649532

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