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, 200 Second Quarter 21,500 Third Quarter 20,600 Fourth Quarter 21,600 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: Fortin Limited maintains an ending inventory of both raw materials and finished goods of 10% of the following quarter's production needs. Before preparing a direct materials budget, the production budget must be prepared.
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, 200 Second Quarter 21,500 Third Quarter 20,600 Fourth Quarter 21,600 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: Fortin Limited maintains an ending inventory of both raw materials and finished goods of 10% of the following quarter's production needs. Before preparing a direct materials budget, the production budget must be prepared.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sd
Sub: Acounting
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
Required production of lights
Number of bulbs per light
Total production needs-bulbs
First
Quarter
24, 200
Total needs-bulbs
Second
Quarter
21,500
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 purchases-bulbs
Total cost of purchases
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: Fortin Limited maintains an ending
inventory of both raw materials and finished goods of 10% of the following quarter's production needs. Before preparing a direct
materials budget, the production budget must be prepared.
Third
Quarter
20,600
FORTIN LIMITED
Direct Materials Budget - Year 2
First
Fourth
Quarter
21,600
Second
Quarter
Third
Fourth
Year
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