Crest Products expects the following sales of its single product September October Units 26,800 19,700 16,100 18,700 16,000 November December January Required: Crest has an ending finished goods Inventory policy of 30% of the next month's sales needs. September 1 Inventory is projected to be 7,400 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 3,000 units of Component X and 159,000 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. Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted production (units) Direct materials requirements per unit Total direct material needed Plus Ending inventory Less: Beginning 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 14,000 units at December 31, and a constant unit cost of $4 per lb. December Crest Products Direct Materials Purchases Budget (Component Z) For the Quarter Ending December 31 October November Total purchases of Component Z Cost of Component Z Budgeted cost of Component Z purchases Total December (11,172) (10,128) (10,734) $ Total 14,000 11,172 651,992
Crest Products expects the following sales of its single product September October Units 26,800 19,700 16,100 18,700 16,000 November December January Required: Crest has an ending finished goods Inventory policy of 30% of the next month's sales needs. September 1 Inventory is projected to be 7,400 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 3,000 units of Component X and 159,000 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. Budgeted unit sales Plus: Ending finished goods inventory Less: Beginning finished goods inventory Budgeted production (units) Crest Products Production Budget For the Quarter Ending December 31 October November Budgeted production (units) Direct materials requirements per unit Total direct material needed Plus Ending inventory Less: Beginning 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 14,000 units at December 31, and a constant unit cost of $4 per lb. December Crest Products Direct Materials Purchases Budget (Component Z) For the Quarter Ending December 31 October November Total purchases of Component Z Cost of Component Z Budgeted cost of Component Z purchases Total December (11,172) (10,128) (10,734) $ Total 14,000 11,172 651,992
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Crest Products expects the following sales of its single product
Units
September
October
November
December
January
Required:
Crest has an ending finished goods Inventory policy of 30% of the next month's sales needs. September 1 Inventory is projected to be
7,400 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials Inventory includes
3,000 units of Component X and 159,000 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.
26,800
19,700
16,100
18,700
16,000
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
Less: Beginning 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 14,000 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
Total purchases of Component Z
Cost of Component Z
Budgeted cost of Component Z purchases
(11,172)
(10,128)
Total
December
(10,734)
$
Total
14,000
11,172
651,992
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