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Budgeted Unit Sales Add: Ending Finished Goods Total Needs Less: Beginning Finished Goods Required Production (units) Additional Information ● ● ● Using the Production Budget above and the following additional information, complete the Direct Materials Budget provided. Required Production (units) Pounds of Raw Material per Unit Quarter 1 40,000 15,000 55,000 12,000 43,000 PRODUCTION BUDGET Pounds of Raw Material to Meet Production Add: Ending Pounds of Raw Materials Total Pounds of Raw Materials Each unit requires 10 pounds of material and each pound of material costs $0.10. The company desires an ending inventory equal to 20% of the next period's production needs (assume Quarter 3 production needs are 60,000 units). Beginning raw material inventory = 40,000 pounds. Less: Beginning Pounds of Raw Materials Unit Cost of Raw Materials Pounds of Raw Materials to be Purchased Cost of Raw Materials to be purchased Quarter 2 60,000 25,000 85,000 15,000 70,000 Quarter 1 6 Months 100,000 25,000 125,000 12,000 113,000 Quarter 2 6 Months

Budgeted Unit Sales Add: Ending Finished Goods Total Needs Less: Beginning Finished Goods Required Production (units) Additional Information ● ● ● Using the Production Budget above and the following additional information, complete the Direct Materials Budget provided. Required Production (units) Pounds of Raw Material per Unit Quarter 1 40,000 15,000 55,000 12,000 43,000 PRODUCTION BUDGET Pounds of Raw Material to Meet Production Add: Ending Pounds of Raw Materials Total Pounds of Raw Materials Each unit requires 10 pounds of material and each pound of material costs $0.10. The company desires an ending inventory equal to 20% of the next period's production needs (assume Quarter 3 production needs are 60,000 units). Beginning raw material inventory = 40,000 pounds. Less: Beginning Pounds of Raw Materials Unit Cost of Raw Materials Pounds of Raw Materials to be Purchased Cost of Raw Materials to be purchased Quarter 2 60,000 25,000 85,000 15,000 70,000 Quarter 1 6 Months 100,000 25,000 125,000 12,000 113,000 Quarter 2 6 Months

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Production Budget and Direct Materials Planning #### Production Budget | | Quarter 1 | Quarter 2 | 6 Months | |------------------------|-----------|-----------|----------| | **Budgeted Unit Sales**| 40,000 | 60,000 | 100,000 | | **Add: Ending Finished Goods** | 15,000 | 25,000 | 25,000 | | **Total Needs** | 55,000 | 85,000 | 125,000 | | **Less: Beginning Finished Goods** | 12,000 | 15,000 | 12,000 | | **Required Production (units)** | 43,000 | 70,000 | 113,000 | #### Instructions Using the Production Budget above and the following additional information, complete the Direct Materials Budget provided. #### Additional Information - Each unit requires 10 pounds of material and each pound of material costs $0.10. - The company desires an ending inventory equal to 20% of the next period’s production needs (assume Quarter 3 production needs are 60,000 units). - Beginning raw material inventory = 40,000 pounds. #### Direct Materials Budget | | Quarter 1 | Quarter 2 | 6 Months | |-------------------------------|-----------|-----------|----------| | **Required Production (units)** | | | | | **Pounds of Raw Material per Unit** | | | | | **Pounds of Raw Material to Meet Production** | | | | | **Add: Ending Pounds of Raw Materials** | | | | | **Total Pounds of Raw Materials** | | | | | **Less: Beginning Pounds of Raw Materials** | | | | | **Pounds of Raw Materials to be Purchased** | | | | | **Unit Cost of Raw Materials** | | | | | **Cost of Raw Materials to be Purchased** | | | | This table is designed to help you calculate the necessary amount of raw materials required to meet production goals, factoring in costs and inventory levels. Use the production budget data and fill in the direct materials budget accordingly.
Transcribed Image Text:### Production Budget and Direct Materials Planning #### Production Budget | | Quarter 1 | Quarter 2 | 6 Months | |------------------------|-----------|-----------|----------| | **Budgeted Unit Sales**| 40,000 | 60,000 | 100,000 | | **Add: Ending Finished Goods** | 15,000 | 25,000 | 25,000 | | **Total Needs** | 55,000 | 85,000 | 125,000 | | **Less: Beginning Finished Goods** | 12,000 | 15,000 | 12,000 | | **Required Production (units)** | 43,000 | 70,000 | 113,000 | #### Instructions Using the Production Budget above and the following additional information, complete the Direct Materials Budget provided. #### Additional Information - Each unit requires 10 pounds of material and each pound of material costs $0.10. - The company desires an ending inventory equal to 20% of the next period’s production needs (assume Quarter 3 production needs are 60,000 units). - Beginning raw material inventory = 40,000 pounds. #### Direct Materials Budget | | Quarter 1 | Quarter 2 | 6 Months | |-------------------------------|-----------|-----------|----------| | **Required Production (units)** | | | | | **Pounds of Raw Material per Unit** | | | | | **Pounds of Raw Material to Meet Production** | | | | | **Add: Ending Pounds of Raw Materials** | | | | | **Total Pounds of Raw Materials** | | | | | **Less: Beginning Pounds of Raw Materials** | | | | | **Pounds of Raw Materials to be Purchased** | | | | | **Unit Cost of Raw Materials** | | | | | **Cost of Raw Materials to be Purchased** | | | | This table is designed to help you calculate the necessary amount of raw materials required to meet production goals, factoring in costs and inventory levels. Use the production budget data and fill in the direct materials budget accordingly.
Expert Solution
Step 1: Introduction:

The production budget is referred as a detailed plan that outlines number of units the company needs to produce to meet its sales forecast and maintain desired inventory levels.

Direct material cost is the cost of raw material produced or purchased to produce the final product.

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