Homework 2 Solutions - HOMEWORK 2(Total Possible Points 100 You MUST show your work Problem 1 Master Budget(20 points total Omega Inc has developed the

Homework 2 Solutions - HOMEWORK 2(Total Possible Points 100...

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1 HOMEWORK 2 (Total Possible Points: 100) You MUST show your work! Problem 1: Master Budget (20 points total)Omega, Inc. has developed the following sales forecast for the first six months of the coming year Month Sales (in units) January 30,000 February 50,000 March 70,000 April 80,000 May 60,000 June 50,000 The beginning inventory on January 1 is 8,000 units. The desired ending inventory for the coming year is to be 25 percent of next month's sales. Each unit requires 6 units of material A at $8 per unit and 3 units of material B at $2 per unit. There are 15,000 units of A and 4,500 units of B on hand January 1 and the desired ending inventory for these will be 30 percent of next month's needs for the coming year. a.Prepare production budgets for February, March and April. (10 points)February March April May June Sales 50,000 70,000 80,000 60,000 50,000 Desired ending Inventory 17,500 20,000 15,000 12,500 Total needs 67,500 90,000 95,000 72,500 Beginning Inventory 12,500 17,500 20,000 15,000 Production needed 55,000 72,500 75,000 57,500
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2 b.Prepare purchase budgets for materials A and B in units and dollars for the same months. (10 points)Material A February March April May Production 330,000 435,000 450,000 345,000 Desired ending Inventory 130,500 135,000 103,500 Total needs 460,500 570,000 553,500 Beginning Inventory 99,000 130,500 135,000 Purchases Needed 361,500 439,500 418,500 Cost per unit x $8 x $8 x $8 Purchase cost $2,892,000 3,516,000 $3,348,000 Material B February March April May Production 165,000 217,500 225,000 172,500 Desired ending inventory 65,250 67,500 51,750 Total needs 230,250 285,000 276,750 Beginning inventory 49,500 65,250 67,500 Purchases needed 180,750 219,750 209,250 Cost per unit x $2 x $2 x $2 Purchase cost $361,500 $439,500 $418,500
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