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Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires four pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter-July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

a.

The finished goods inventory on hand at the end of each month must be equal to 6,000 units plus 33% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 18,540 units.
b.

The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 for material A135 is budgeted to be 82,600 pounds.
c. The company maintains no work in process inventories.
A sales budget for Playclay for the last six months of the year follows.

Budgeted Sales
in Units
  July 38,000             
  August 48,000             
  September 68,000             
  October 33,000             
  November 18,000             
  December 8,000             
Required:
1.

Prepare a production budget for Playclay for the months July, August, September, and October. (Input all amounts as positive values. Do not round intermediate calculations.)
Playclay
Production Budget

   July    August    September    October
  Budgeted sales   
  :

  Total needs
  :

  Required production

3.

Prepare a direct materials budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total. (Input all amounts as positive values. Do not round intermediate calculations.)
Playclay
Direct Materials Budget

   July    August    September    Third
  Quarter
  Production needs   
  :

  Total Material A135 needs
  :

  Material A135 purchases


Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9798182

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