Question 1

Production Budget

Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:

	Unit Sales
April	261,000
May	319,000
June	290,000
July	348,000

Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000.

Required:

Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Aqua-pro Inc.
Production Budget
For the Second Quarter
	April	May	June	Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Question 2

Direct Materials Purchases Budget

Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next four months as follows:

	Units
July	3,500
August	4,400
September	4,900
October	6,300

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

Required:

Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.

Langer Company
Direct Materials Purchases Budget
For July, August and September
	July	August	September	Total
Units to be produced
Direct materials per unit (ounces)
Production needs
Desired ending inventory (ounces)
Total needs
Less: Beginning inventory
Direct materials to be purchased (ounces)
Cost per ounce	$0.08	$0.08	$0.08	$0.08
Total purchase cost	$	$	$	$

Question 3

Direct Labor Budget

Evans Company produces asphalt roofing materials. The production budget in bundles for Evans' most popular weight of asphalt shingle is shown for the following months:

	Units
March	4,000
April	13,000
May	14,400
June	17,000

Each bundle produced requires (on average) 0.40 direct labor hours. The average cost of direct labor is $20 per hour.

Required:

Prepare a direct labor budget for March, April, and May, showing the hours needed and the direct labor cost for each month and in total. Do not include a multiplication symbol as part of your answer.

Evans Company
Direct Labor Budget
For March, April, and May
	March	April	May	Total
Units to be produced
Direct labor time per unit (hours)
Total hours needed
Cost per hour	$	$	$	$
Total direct labor cost	$	$	$	$