BRIEF EXERCISES
BE 159
Wynn, Inc. manufactures beanies. The budgeted units to be produced and sold are below:
Expected ProductionExpected Sales
August3,5002,900
September2,8003,900
It takes 18 yards of yarn to produce a beanie. The company’s policy is to maintain yarn at the end of each month equal to 5% of next month’s production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month’s anticipated production needs. The cost of yarn is $0.20 a yard. At August 1, 3,150 yards of yarn were on hand.
Instructions
Compute the budgeted cost of purchases.
BE 160
The budget components for Birk Company for the quarter ended June 30 appear below. Birk sells trash cans for $12 each. Budgeted production for the next three months is:
April26,000 units
May46,000 units
June29,000 units
Birk desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Birk had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Birk desires to have 10 percent of the following month’s production material needs on hand. At March 31, Birk had 13,000 pounds of plastic on hand. The materials used in production costs $0.60 per pound. Each trash can produced requires 0.10 hours of direct labor.
Instructions
Compute the cost of the plastic inventory at the end of May.
BE 161
Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows:
AprilMayJune
Budgeted production21,00022,00024,000
The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month’s budgeted production needs. The cost of plastic is $2.20 per pound.
Instructions
Prepare a direct materials purchases budget for the month of May.
BE 162
The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for $12 each. Budgeted sales and production for the next three months are:
Sales Production
April 20,000 units26,000 units
May 50,000 units46,000 units
June 30,000 units29,000 units
Park desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Park desires to have 10 percent of the following month’s production material needs on hand. At March 31, Park had 13,000 pounds of plastic on hand. The materials used in production cost $0.60 per pound. Each trash can produced requires 0.10 hours of direct labor.
Instructions
Determine how much the materials purchases budget will be for the month ending April 30.
BE 163
Jent Company reported the following information for 2013:
OctoberNovemberDecember
Budgeted sales$320,000$340,000$360,000
Budgeted purchases$120,000$128,000$144,000
?All sales are on credit.
?Customer amounts on account are collected 40% in the month of sale and 60% in the following month.
Instructions
Compute the amount of cash Jent will receive during November.
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