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Crest Products expects the following sales of its single product: September October November December January Required: Units 20,300 23,000 15,100 20,800 26,300 Crest has an ending finished goods inventory policy of 30% of the next month's sales needs. September 1 inventory is projected to be 5,700 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 4,000 units of Component X and 156,000 units of Component Z. Crest desires to maintain a Component X inventory equal to 10% of next month's production needs and a Component Z inventory equal to 20% of next month's production needs. a. Prepare a production budget for Crest for the quarter ending December 31. Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) December Total

Crest Products expects the following sales of its single product: September October November December January Required: Units 20,300 23,000 15,100 20,800 26,300 Crest has an ending finished goods inventory policy of 30% of the next month's sales needs. September 1 inventory is projected to be 5,700 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 4,000 units of Component X and 156,000 units of Component Z. Crest desires to maintain a Component X inventory equal to 10% of next month's production needs and a Component Z inventory equal to 20% of next month's production needs. a. Prepare a production budget for Crest for the quarter ending December 31. Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) December Total

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crest Products expects the following sales of its single product: September October November December January Required: Units 20,300 23,000 15,100 20,800 26,300 Crest has an ending finished goods inventory policy of 30% of the next month's sales needs. September 1 inventory is projected to be 5,700 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 4,000 units of Component X and 156,000 units of Component Z. Crest desires to maintain a Component X inventory equal to 10% of next month's production needs and a Component Z inventory equal to 20% of next month's production needs. a. Prepare a production budget for Crest for the quarter ending December 31. Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) Budgeted production (units) Direct materials requirements per unit Total direct material needed Plus: Ending inventory b. Prepare a direct materials purchases budget for Component Z for quarter ending December 31. Assume a desired ending inventory for Component Z of 15,000 units at December 31, and a constant unit cost of $4 per lb. Crest Products Direct Materials Purchases Budget (Component Z) For the Quarter Ending December 31 October November December Less: Beginning inventory Total purchases of Component Z Cost of Component Z Budgeted cost of Component Z purchases (12,378) (10,086) Total December (13,470) $ Total 15,000 12,378 729,168
Transcribed Image Text:Crest Products expects the following sales of its single product: September October November December January Required: Units 20,300 23,000 15,100 20,800 26,300 Crest has an ending finished goods inventory policy of 30% of the next month's sales needs. September 1 inventory is projected to be 5,700 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 4,000 units of Component X and 156,000 units of Component Z. Crest desires to maintain a Component X inventory equal to 10% of next month's production needs and a Component Z inventory equal to 20% of next month's production needs. a. Prepare a production budget for Crest for the quarter ending December 31. Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) Budgeted production (units) Direct materials requirements per unit Total direct material needed Plus: Ending inventory b. Prepare a direct materials purchases budget for Component Z for quarter ending December 31. Assume a desired ending inventory for Component Z of 15,000 units at December 31, and a constant unit cost of $4 per lb. Crest Products Direct Materials Purchases Budget (Component Z) For the Quarter Ending December 31 October November December Less: Beginning inventory Total purchases of Component Z Cost of Component Z Budgeted cost of Component Z purchases (12,378) (10,086) Total December (13,470) $ Total 15,000 12,378 729,168
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