Garver Industries has budgeted the following unit sales: $15,000\begin{array} { l r } 2017& { \text { Units } } \\\text { January } & 10,000 \\\text { February } & 8,000 \\\text { March } & 9,000 \\\text { April } & 11,000 \\\text { May } & 15,000\end{array}$ The finished goods units on hand on December 31 2016 was 2000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8640 pounds of raw materials on hand at December 31 2016.
Instructions
For the first quarter of 2017 prepare (1) a production budget and (2) a direct materials budget.

Question

Garver Industries has budgeted the following unit sales:

15,000\begin{array} { l r } 2017& { \text { Units } } \\\text { January } & 10,000 \\\text { February } & 8,000 \\\text { March } & 9,000 \\\text { April } & 11,000 \\\text { May } & 15,000\end{array}

The finished goods units on hand on December 31 2016 was 2000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8640 pounds of raw materials on hand at December 31 2016.
Instructions
For the first quarter of 2017 prepare (1) a production budget and (2) a direct materials budget.

Harry Singh · Accepted Answer

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