Question
ProductionandDirectMaterialBudgets WalshCompanyhasbudgetedthefollowingunitsalesforthefirstquarterof2017 Units Jan36,000 Feb54,000 Mar 45,000 Ittakestwopoundsofdirectmaterials,whichcost$6perpound,tomanufactureoneunitofproduct.Itisthecompanyspolicytohaveafinishedgoodsinventoryonhandattheendofeachmonthequal20%ofnextmonthssalesandtomaintainadirecttmaterialsinventoryattheendofthemonthequalto30%ofthenextmonthsproductionneeds.TheinventorylevelsatDecember31,2016,wereinaccordancewithcompanypolicy. Answerthefollowingquestionsindependentquestionsandshowcomputationswhichsupportanswer. 1. WhatwasthenumberofunitsinendingfinishedgoodsinventoryatDecember31,2016? 2. CalculatethenumberofunitsthatshouldbescheduledforproductioninthemonthofFebruary? 3. WhatwasthenumberofunitsinendingdirectmaterialsininventoryatDecember31,2016? WhatwasthenumberofunitsandthedollaramountofdirectmaterialspurchasesbudgetedforthemonthofJanuary?
ProductionandDirectMaterialBudgets
WalshCompanyhasbudgetedthefollowingunitsalesforthefirstquarterof2017
Units
Jan36,000
Feb54,000
Mar 45,000
Ittakestwopoundsofdirectmaterials,whichcost$6perpound,tomanufactureoneunitofproduct.Itisthecompanyspolicytohaveafinishedgoodsinventoryonhandattheendofeachmonthequal20%ofnextmonthssalesandtomaintainadirecttmaterialsinventoryattheendofthemonthequalto30%ofthenextmonthsproductionneeds.TheinventorylevelsatDecember31,2016,wereinaccordancewithcompanypolicy.
Answerthefollowingquestionsindependentquestionsandshowcomputationswhichsupportanswer.
1.WhatwasthenumberofunitsinendingfinishedgoodsinventoryatDecember31,2016?
2.CalculatethenumberofunitsthatshouldbescheduledforproductioninthemonthofFebruary?
3.WhatwasthenumberofunitsinendingdirectmaterialsininventoryatDecember31,2016?
WhatwasthenumberofunitsandthedollaramountofdirectmaterialspurchasesbudgetedforthemonthofJanuary?
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