EX 9-25 (Algo) Budgeting Production and Raw-Material Purchases (LO 9-3, 9-6) GreenThumb Organic Fertilizer Company plans to sell 240,000 units of finished product in July and anticipates a growth rate in sales of 3 percent per month. The desired monthly ending inventory in units of finished product is 70 percent of the next month's estimated sales. There are 168,000 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of raw material at a cost of $2.05 per pound. There are 730,000 pounds of raw material in inventory on June 30. Required: 1. Compute the company's total required production in units of finished product for the entire three-month period ending September 30. Note: Round all intermediate calculations and your final answer to the nearest unit. 2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three- month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30. 1. Total required production in units 2. Total estimated cost
EX 9-25 (Algo) Budgeting Production and Raw-Material Purchases (LO 9-3, 9-6) GreenThumb Organic Fertilizer Company plans to sell 240,000 units of finished product in July and anticipates a growth rate in sales of 3 percent per month. The desired monthly ending inventory in units of finished product is 70 percent of the next month's estimated sales. There are 168,000 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of raw material at a cost of $2.05 per pound. There are 730,000 pounds of raw material in inventory on June 30. Required: 1. Compute the company's total required production in units of finished product for the entire three-month period ending September 30. Note: Round all intermediate calculations and your final answer to the nearest unit. 2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three- month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30. 1. Total required production in units 2. Total estimated cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:EX 9-25 (Algo) Budgeting Production and Raw-Material Purchases (LO 9-3, 9-6)
GreenThumb Organic Fertilizer Company plans to sell 240,000 units of finished product in July and anticipates a growth rate in sales
of 3 percent per month. The desired monthly ending inventory in units of finished product is 70 percent of the next month's estimated
sales. There are 168,000 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of raw material at a
cost of $2.05 per pound. There are 730,000 pounds of raw material in inventory on June 30.
Required:
1. Compute the company's total required production in units of finished product for the entire three-month period ending September
30.
Note: Round all intermediate calculations and your final answer to the nearest unit.
2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three-
month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25
percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period
ending September 30.
1. Total required production in units
2. Total estimated cost
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