Exercise 8-2 Production Budget [LO8-3] Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: April May Unit Sales 88, eee 90, see 128, Bee 99.ee June July The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of- month Inventory levels must equal 15% of the following month's unit sales. The inventory at the end of March was 13.200 units Required: Prepare a production budget by month and in total, for the second quarter. Down Under Products, Ltd., Production Budget April May June Quarter Budgeted unit sales Total needs 0000 Required 000 8-1,8-2,8-3,8-7 Sirved Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in westem Siberia. The cost of the musk oil is $170 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Budgeted production, in bottles First 64, eee Second 94.ee ThirdFourth 154.eee 184.ee Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oll at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 38,400 grams of musk oil will be on hand to start the first quarter of Year 2 Required: Prepare a direct materials budget for muskoll, by quarter and in total, for Year 2. Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw mater als to purchased Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows: Total cash receipts Total cash disbursements 1st Quarter $ 300, ONNO $ 358 2nd Quarter 3rd Quarter 4th Quarter $ 420, $350,000 $ 370, e 320 318 338. The company's beginning cash balance for the upcoming fiscal year will be $35.000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded Required: Prepare the company's cash budget for the upcoming fiscal year. (Cosh deficiency, repayments and Interest should be indicated by a minus sign.) Garden Depot Cash Budget 1st Quarter 2nd Quarter ard Quarter 4th Quarter Year Beginning cash balance Total cash receipts 0 Total cash available Total cash disbursements Excess (deficiency of cash available over disbursements Financing Borrowings Repayments oo Tofano ol Endine change
