Question
Feathered Friends makes backyard bird feeders. The company sells the bird feeders to home improvement stores for $12 per birdfeeder. Each birdfeeder requires 2.0 board
Feathered Friends makes backyard bird feeders. The company sells the bird feeders to home improvement stores for $12 per birdfeeder. Each birdfeeder requires 2.0 board feet of wood, which the company obtains at a cost of $5 per board foot. The company would like to maintain an ending stock of wood equal to 25% of the nextmonth's production requirements.The company would also like to maintain an ending stock of finished bird feeders equal to 10% of the next month's sales. Sales data for the company is as follows:
Requirement 1. Prepare the sales budget for the first three months of the year, as well as a summary budget for the quarter, including a separate section that details the type of sales made (cash versus credit.)
Feathered Friends | |||||
Sales Budget | |||||
For the Quarter Ended March 31 | |||||
Month |
| January | February | March | Quarter |
Unit sales |
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Multiply by: Sales price per unit |
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Total sales revenue |
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Cash sales |
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Credit sales |
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Total sales revenue |
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Requirement 2. Prepare the production budget for the first three months of the year, as well as a summary budget for the quarter.
Feathered Friends | ||||||
Production Budget | ||||||
For the Quarter Ended March 31 | ||||||
Month |
| January | February | March | Quarter |
Unit sales |
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Plus: Desired ending inventory |
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Total needed |
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Less: Beginning inventory |
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Units to produce |
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Requirement 3. Prepare the direct materials purchases budget for the first three months of the year, as well as a summary budget for the quarter. Assume the company needs 115,000
board feet of wood for production in April. (Round your answers to the nearest whole dollar.)
Feathered Friends | |||||
Direct Materials Budget | |||||
For the Quarter Ended March 31 | |||||
Month |
| January | February | March | Quarter |
Units to be produced |
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Multiply by: Quantity (board feet) of DM needed per unit |
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Quantity (board feet) needed for production |
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Plus: Desired ending inventory of DM |
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Total quantity (board feet) needed |
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Less: Beginning inventory of DM |
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Quantity (board feet) to purchase |
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Multiply by: Cost per board foot |
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Total cost of DM purchases |
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Requirement 4. Prepare the cash collections budget for January, February, and March, as well as a summary for the first quarter. (Round your answers to the nearest whole dollar.)
Review the sales budget prepared in Requirement 1.
Feathered Friends | |||||
Cash Collections Budget | |||||
For the Quarter Ended March 31 | |||||
Month |
| January | February | March | Quarter |
Cash sales in current month |
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Collections on credit sales: |
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70% of credit sales made one month ago |
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20% of credit sales made two months ago |
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6% of credit sales made three months ago |
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Total cash collections |
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Requirement 5. Prepare the cash payments budget for direct materials purchases for the months of January, February, and March, as well as a summary for the first quarter.
Review the direct materials budget prepared in Requirement 3.
Feathered Friends | ||||||
Cash Payments for Direct Materials Budget | ||||||
For the Quarter Ended March 31 | ||||||
Month |
| January | February | March | Quarter |
30% of current month DM purchases |
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70% of last month's DM purchases |
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Total cash payments |
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