9-11 and 9-12

EXERCISE 9-11 Production and Direct Materials Budgets [LO3, L04] The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales . . . .. .. 8,000 7,000 6,000 7,000 The company expects to start the first quarter with 1:600 units in finished goods inventory Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,700 units. In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3, 120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14.820. Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3, 140 pounds. Manage- ment plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the follow- ing quarter. Required: 1 . Prepare the company's production budget for the upcoming fiscal year. 2 . Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. EXERCISE 9-12 Sales and Production Budgets [LO2, LO3] The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter and Quarter 3rd Quarter 4th Quarter Budgeted unit sales . . . .... 11,000 12,000 14,000 13,000 Profit Planning The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter. and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is ex- pected to be collected in the first quarter, is $70.200. The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next 1.850 units. quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is Required: 1. 2. Prepare the company's sales budget and schedule of expected cash collections. Prepare the company's production budget for the upcoming fiscal year