On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,000; second quarter 6,900; third quarter 7,300. Ending raw materials inventory: 40% of the next quarter’s production requirements. Ending finished goods inventory: 25% of the next quarter’s expected sales units. Third-quarter production: 7,360 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $6 per pound. (A) Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,000; second quarter 6,900; third quarter 7,300. Ending raw materials inventory: 40% of the next quarter’s production requirements. Ending finished goods inventory: 25% of the next quarter’s expected sales units. Third-quarter production: 7,360 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $6 per pound. (A) Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020.
The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $6 per pound.
| Sales units: | First quarter 5,000; second quarter 6,900; third quarter 7,300. | |
| Ending raw materials inventory: | 40% of the next quarter’s production requirements. | |
| Ending finished goods inventory: | 25% of the next quarter’s expected sales units. | |
| Third-quarter production: | 7,360 units. |
The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $6 per pound.
(A) Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
|
HARDIN COMPANY
Production Budget For the Six Months Ending June 30, 2020June 30, 2020For the Quarter Ending June 30, 2020 |
||||||
| Quarter | ||||||
|
1
|
2
|
Six
Months |
||||
|
Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
|
|
|
||||
|
AddLess: Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
|
||||||
|
Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
|
|
|
||||
|
AddLess: Beginning Finished Goods UnitBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitDirect Materials Per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Units
|
||||||
(B) Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020.
|
HARDIN COMPANY
Direct Materials Budget For the Six Months Ending June 30, 2020June 30, 2020For the Quarter Ending June 30, 2020 |
|||||||
|
Quarter
|
|
||||||
|
1
|
2
|
Six Months
|
|||||
|
Beginning Direct Materials (Pounds)Cost Per PoundDesired Ending Direct Materials (Pounds)Direct Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
|
|
|
|||||
|
|
|
|
|||||
|
AddLess: Beginning Direct Materials (Pounds)Cost Per PoundDesired Ending Direct Materials (Pounds)Direct Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
|
|||||||
|
|
|
|
|||||
|
AddLess: Beginning Direct Materials (Pounds)Cost Per PoundDesired Ending Direct Materials (Pounds)Direct Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
|
|||||||
|
Beginning Direct Materials (Pounds)Cost Per PoundDesired Ending Direct Materials (Pounds)Direct Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursUnits to be Produced
|
|
|
|||||
| $ | $ | ||||||
|
|
$ | $ | $ |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education