Fuqua Company's sales budget projects unit sales of part 198Z of 10,100 units in January, 12,600 units in February, and 13,700 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2019.

A: Prepare a projected budget for Jan and Feb 2020.

B: Prepare a direct material budget for Jan 2020.

Question

Ariel Odonnell

Business

24 June, 15:51

Fuqua Company's sales budget projects unit sales of part 198Z of 10,100 units in January, 12,600 units in February, and 13,700 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2019.

A: Prepare a projected budget for Jan and Feb 2020.

B: Prepare a direct material budget for Jan 2020.

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Answers (1)

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Ricardo Meadows · Answer 1

Fuqua Company

Production budget

For the months of January and February 2020

January February

Projected sales 10,100 12,600

Desired ending inventory 2,520 2,740

Required production 12,620 15,340

Beginning inventory - 2,020 - 2,520

Units to be produced 10,600 12,820

Fuqua Company

Direct Materials budget

For the month of January 2020

January

Units to be produced 10,600

Direct materials per unit 3

Direct materials needed 31,800

Desired ending inventory 15,384

Beginning inventory - 12,720

Direct materials purchases 34,464

Cost per pound $4

Direct materials' cost $137,856