MasterBudgetTutorial

# MasterBudgetTutorial - 7 UNIVERSITY OF TECHNOLOGY SCHOOL OF...

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UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS ADMINISTRATION MASTER BUDGET TUTORIAL SHEET 1. Jiggy Company plans to sell 33,000 units of a product during the month of May. The company plans to have 2,500 units on hand at the end of the month. If 1,200 units are on hand on May 1, how many units must be pro- duced during May? 2. Jiggy Company plans to sell 33,000 units during the month of May. Begin- ning inventory was 1,200 units. The company plans to have 2,500 units on hand at the end of the month. Each unit requires 3 pounds of raw materi- als. If raw material inventory on May 1 is 4,400 pounds and desired end- ing inventory is 2,200 pounds, how many pounds of raw materials must be purchased during May? 3. Feedee Company has budgeted sales and production (in units) over the next three months as follows: January February March Sales 50,000 ? 80,000 Production 52,000 64,000 78,000 There are 10,000 units on hand on January 1. A minimum of 20 percent of the next month's sales in units must be on hand at the end of each month. April sales are expected to be 70,000. What is the budgeted sales for February? Figure 8-1 Projected sales for Sommers, Inc., for next year and beginning and ending inventory data are as follows: Sales 50,000 units Beginning inventory 4,000 units Desired ending inventory 8,000 units The selling price is \$40 per unit. Each unit requires four pounds of ma- terial which costs \$6 per pound. The beginning inventory of raw materi- als is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of the year. 4. Refer to Figure 8-1. What is Sommers' budgeted sales? 5. Refer to Figure 8-1. According to Sommers' production budget, how many units should be produced? 6. Refer to Figure 8-1. How many pounds of material would Sommers need to purchase? 7. Refer to Figure 8-1. What is Sommers' budgeted total purchase cost of direct materials? 7

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8. Bronco Company sells a product for \$10. Budgeted sales for the first quarter of the current year are as follows: Budgeted Sales January \$600,000 February 800,000 March 900,000 The company wants to maintain an inventory of finished units equal to 30 percent of the following month's sales. 10,000 units are on hand at the beginning of the year. Each unit requires two pounds of raw material costing \$1 per pound. The company maintains a raw materials inventory equal to 20 percent of the following month's production needs. What is the budgeted production in units for February? 9. Budgeted sales for the first quarter for Cullison Company, a retailer, are as follows: Budgeted Sales (Units) January 75,000 February 100,000 March 110,000 Cullison started the year with an inventory of 7,500 units. The company likes to maintain an inventory equal to 10 percent of next month's budgeted sales. What is budgeted purchases in units for February?
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MasterBudgetTutorial - 7 UNIVERSITY OF TECHNOLOGY SCHOOL OF...

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