Tonga Toys manufactures and distributes a number of products to retailers. One o
ID: 2374633 • Letter: T
Question
Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires five pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter%u2014July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:
The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 30% of the next month%u2019s sales. The finished goods inventory on June 30 is budgeted to be 19,400 units.
The raw materials inventory on hand at the end of each month must be equal to one-half of the following month%u2019s production needs for raw materials. The raw materials inventory on June 30 for material A135 is budgeted to be 102,500 pounds.
Prepare a production budget for Playclay for the months July, August, September, and October. (Input all amounts as positive values. Do not round intermediate calculations.)
Prepare a direct materials budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total. (Input all amounts as positive values. Do not round intermediate calculations.)
Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires five pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter%u2014July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:
Explanation / Answer
How did you come up with the beginning inventory?