6-19 Budgeting material purchases. Production Budget: Finished Goods (units) Budgeted sales 45,000 Add target ending finished goods inventory 18,000Total requirements 63,000 Deduct beginning finished goods inventory 16,000Units to be produced 47,000Direct Materials Purchases Budget: Direct Materials (in gallons) Direct materials needed for production (47,000 3) 141,000 Add target ending direct materials inventory 50,000Total requirements 191,000 Deduct beginning direct materials inventory 60,000Direct materials to be purchased 131,0006-20Revenues and production budget. 1. Selling Price Units Sold Total Revenues 12-ounce bottles $0.25 4,800,000a$1,200,000 4-gallon units 1.50 1,200,000b1,800,000$3,000,000a400,000 × 12 months = 4,800,000 b100,000 × 12 months = 1,200,000 2. Budgeted unit sales (12-ounce bottles) 4,800,000 Add target ending finished goods inventory 600,000Total requirements 5,400,000 Deduct beginning finished goods inventory 900,000Units to be produced 4,500,0003.BeginningBudgetedTargetBudgeted= + inventorysalesending inventoryproduction= 1,200,000 + 200,000 1,300,000 = 100,000 4-gallon units
6-30Revenue and production budgets. This is a routine budgeting problem. The key to its solution is to compute the correct quantitiesof finished goods and direct materials. Use the following general formula: Budgetedproductionor purchases= Targetendinginventory+ Budgetedsales ormaterials used–Beginninginventory1. Scarborough Corporation Revenue Budget for 2012 Units Price Total Thingone 60,000 $165 $ 9,900,000 Thingtwo 40,000 250 10,000,000Budgeted revenues $19,900,0002. Scarborough Corporation Production Budget (in units) for 2012 Thingone Thingtwo Budgeted sales in units 60,000 40,000 Add target finished goods inventories, December 31, 2012 25,0009,000Total requirements 85,000 49,000 Deduct finished goods inventories, January 1, 2012 20,0008,000Units to be produced 65,00041,0003.