The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:
Question:
The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:
The company expects to start due the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1.700 units. In addition, the beginning raw materials inventory for the first quarter is to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.
Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equals to 20% of the following quarter’s production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw materials purchases in the quarter acquired and 25% in the following quarter.
Required:
1. Prepare the company’s production budget for the upcoming fiscal year.
2. Prepare the company’s direct materials budget and schedule of expected cash disbursements for the purchases of materials for the upcoming fiscal year.
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Step by Step Answer:
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer