Talal Company’s sales budget projects unit sales of part 198Z of 12,000 units in January, 13,000 units in February, and 14,000 units in March. Each unit of part 198Z requires 5 pounds of materials, which cost $2 per pound. Tyson Chandler Company desires its ending raw materials inventory to equal 60% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2019. Instructions (a) Prepare a production budget for January and February 2020.  (b) Prepare a direct materials budget for January 2020.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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 Talal Company’s sales budget projects unit sales of part 198Z of 12,000

units in January, 13,000 units in February, and 14,000 units in March. Each unit of part 198Z requires 5 pounds of materials, which cost $2 per pound. Tyson Chandler Company desires its

ending raw materials inventory to equal 60% of the next month’s production requirements, and

its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These

goals were met at December 31, 2019.

Instructions

(a) Prepare a production budget for January and February 2020. 

(b) Prepare a direct materials budget for January 2020. 

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