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Problem One: Avatar, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three
Problem One: Avatar, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: April May June Budgeted production (buckets in units) 20,000 25,000 30,000 The company wants to maintain monthly ending inventories of plastic equal to 30% of the following month's budgeted production needs. The cost of plastic is $2.50 per pound Instructions: Prepare a direct materials purchases budget for the month of May. April May June Units to be produced Times: Direct materials per unit Total pounds needed for production Add: Desired ending direct materials (lbs) Total materials required Less: Beginning direct materials (lbs) Direct materials purchases Times: Cost per pound Total cost of direct materials purchases Problem Two: Avatar Inc has budgeted the following unit cales:Problem Two: Avatar, Inc. has budgeted the following unit sales: 2021 2022 Quarter Units Quarter Units 1 100,000 1 120,000 N 110,000 w 125,000 130,000 The finished goods inventory on hand on December 31, 2020 was 25,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 25% of the next quarter's anticipated sales. Instructions: Prepare a production budget for 2022. Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Expected unit sales Add: Desired ending finished goods units Total required finished goods units Less: Beginning finished goods units Required production units
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