Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2020. Quarter 1 Quarter 2 Quarter 3 Quarter 4 2,100 kayaks 2,700 kayaks 1,800 kayaks 1,800 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 15% of the next quarter's anticipated sales. Preliminary sales projections for 2021 are 1,100 units for the first quarter and 2,700 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 315 rotomolded kayaks. Production of each kayak requires 58 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy is that the ending inventory of polyethylene powder should be 20% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2019, is 19,600 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits. The polyethylene powder used in these kayaks costs $1.00 per pound, and the finishing kits cost $150 each. Production of a single kayak requires 3 hours of time by more experienced, type l employees and 4 hours of finishing time by type II employees. The type I employees are paid $19 per hour, and the type II employees are paid $16 per hour. Selling and administrative expenses for this line are expected to be $46 per unit sold plus $6,000 per quarter. Manufacturing overhead is assigned at 160% of labor costs. Your answer is correct. Prepare the production budget for this product line by quarter and in total for 2020. CURRENT DESIGNS Production Budget For the Year Ending December 31, 2020 Q1 Q2 Q3 Expected Unit Sales 2100 2700 1800 Add Desired Ending Finished Goods Unit 405 270 270 Total Required Units 2505 2970 2070 Less : Beginning Finished Goods Unit 315 i 405 i 270 i Required Production Units 2190 2565 1800 Prepare the direct materials budget for this product line by quarter and in total for 2020. (Round cost per pound to 2 decimal places, e.g. 1.25 and other answers to 0 decimal places, eg. 125.) CURRENT DESIGNS Direct Materials Budget-Polyethylene Powder For the Year Ending December 31, 2020 Quarter Q1 Q2 Q3 Units to be produced 2190 2565 1800 Pounds of Polyethylene Powder Per Unit 58 58 58 Total Pounds Needed for Production 127020 148770 104400 Add Desired Ending Inventory of Powder Total Pounds of Powder Required Less Beginning Inventory of Powder Pounds of Polyethylene Powder to be purchased Cost Per Pound $ 1.00 1.00 $ 1.00 $ Cost of Polyethylene Powder to be purchased $ $ $ $ Cost of Required Finishing Kits Total Costs for Direct Materials $ $ $ $ = Prepare the direct materials budget for this product line by quarter and in total for 2020. (Round cost per pound to 2 decimal places, e.g. 1.25 and other answers to 0 decimal places, eg. 125.) CURRENT DESIGNS Direct Materials Budget-Polyethylene Powder For the Year Ending December 31, 2020 Quarter Q1 Q2 23 Q4 Total 2190 2565 1800 1695 58 58 58 58 127020 148770 104400 98310 $ 1.00 $ 1.00 to 1.00 $ 1.00 $ $ $ $ $ $ $
