Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited has developed the following estimates for unit sales in the upcoming year. Budgeted unit sales First Quarter 24,900 Second Third Quarter Quarter 22,800 20,200 Fourth Quarter 21,300 Each light requires two separate LED bulbs, each of which costs $2. To ensure enough LED bulbs are on hand to support short-term production if a problem arises with the sole supplier, Fortin Limited maintains an ending inventory of 10% of the following quarter's production needs. A total of 4,400 LED bulbs will be on hand to start the first quarter of the upcoming fiscal year. Management expects sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year. Required: Prepare a direct materials purchases budget for LED bulbs, by quarter and in total, for the upcoming fiscal year. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total. Hint: The desired ending finished goods inventory at the end of each quarter is 10% of the next quarter's budgeted sales. Before preparing a direct materials budget, the production budget must be prepared. Required production of lights Number of bulbs per light Total production needs-bulbs Total needs-bulbs Required purchases-bulbs Total cost of purchases FORTIN LIMITED Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year
Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited has developed the following estimates for unit sales in the upcoming year. Budgeted unit sales First Quarter 24,900 Second Third Quarter Quarter 22,800 20,200 Fourth Quarter 21,300 Each light requires two separate LED bulbs, each of which costs $2. To ensure enough LED bulbs are on hand to support short-term production if a problem arises with the sole supplier, Fortin Limited maintains an ending inventory of 10% of the following quarter's production needs. A total of 4,400 LED bulbs will be on hand to start the first quarter of the upcoming fiscal year. Management expects sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year. Required: Prepare a direct materials purchases budget for LED bulbs, by quarter and in total, for the upcoming fiscal year. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total. Hint: The desired ending finished goods inventory at the end of each quarter is 10% of the next quarter's budgeted sales. Before preparing a direct materials budget, the production budget must be prepared. Required production of lights Number of bulbs per light Total production needs-bulbs Total needs-bulbs Required purchases-bulbs Total cost of purchases FORTIN LIMITED Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited
has developed the following estimates for unit sales in the upcoming year.
Budgeted unit sales
First
Quarter
24,900
Second
Third
Quarter Quarter
22,800 20,200
Fourth
Quarter
21,300
Each light requires two separate LED bulbs, each of which costs $2. To ensure enough LED bulbs are on hand to support short-term
production if a problem arises with the sole supplier, Fortin Limited maintains an ending inventory of 10% of the following quarter's
production needs. A total of 4,400 LED bulbs will be on hand to start the first quarter of the upcoming fiscal year. Management expects
sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year.
Required:
Prepare a direct materials purchases budget for LED bulbs, by quarter and in total, for the upcoming fiscal year. At the bottom of your
budget, show the dollar amount of purchases for each quarter and for the year in total. Hint: The desired ending finished goods
inventory at the end of each quarter is 10% of the next quarter's budgeted sales. Before preparing a direct materials budget, the
production budget must be prepared.
Required production of lights
Number of bulbs per light
Total production needs-bulbs
Total needs-bulbs
Required purchases-bulbs
Total cost of purchases
FORTIN LIMITED
Direct Materials Budget - Year 2
Quarter
First
Second
Third
Fourth
Year
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