Question # 2

The following facts are known:

The total pounds needed for production are 2 times the units to be produced.

The desired ending direct materials inventory is 20% of the total pounds needed for production.

The beginning direct materials inventory is equal in number to 10% of the units to be produced.

Cost per pound is $5.

Total cost of the direct materials purchases is $1,035,000.

Instructions

Prepare a direct materials budget for the period.

BULL Company has budgeted the following unit sales:

20172016

Quarter UnitsQuarter Units

1105,000190,000

260,000

375,000

4120,000

The finished goods inventory on hand on December 31, 2015 was 21,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of the next quarter's anticipated sales.

Instructions

Prepare a production budget for 2016.