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2 April, 06:10

White Corporation's budget calls for the following sales for next year: Quarter 1 95,000 units Quarter 3 67,000 units Quarter 2 81,000 units Quarter 4 98,000 units Each unit of the product requires 5 pounds of direct materials. The company's policy is to begin each quarter with an inventory of product equal to 5% of that quarter's estimated sales requirements and an inventory of direct materials equal to 20% of that quarter's estimated direct materials requirements for production. Required: 1. Determine the production budget for the second quarter. 2. Determine the materials purchases budget for the second quarter.

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  1. 2 April, 06:36
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    Answer: & Explanation:

    Production Budget q2

    - Q2

    sales 67,000

    ending policy 4,050 (5% of Q3)

    Beginning 3,350 (5% of current quarter)

    Production 67,700 (sales + ending - beginning)

    Raw materials Budget q2

    Production Needs 338,500 (Units x 5)

    ending policy 81,850 (20% of production q3)

    Beginning 67,700 (20% of q2 production needs)

    Purchase 352,650 (needs + desired ending - beginning)
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