Please solve this problem: Exercise 21-6 (Part Level Submission) On January 1, 2
ID: 2569492 • Letter: P
Question
Please solve this problem:
Exercise 21-6 (Part Level Submission) On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017 Sales units: Ending raw materials inventory: 40% of the next quarter's production requirements Ending finished goods inventory: 25% of the next quarter's expected sales units Third-quarter production: First quarter 5,800; second quarter 6,000; third quarter 7,300 7,840 units The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. 5 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per poundExplanation / Answer
Production Budget and Direct Material Purchase Budget is as prepared below:
Production Budget Hardin Company Production Budget For the six months ending June 30, 2017 Quarter Particulars 1 2 Year Expected Sale Units (a) 5,800 6,000 11,800 Add: Desired Ending finished goods units (b) 1,500 1,825 1,825 Total units available for sale (a+b) 7,301 7,827 13,625 Less: Beginning finished goods units (c ) 1,450 1,500 1,450 Planned production units (d)= (a+b-c) 5,851 6,327 12,175 Raw material Budget Hardin Company Raw Material Purchase Budget For the six months ending June 30, 2017 Quarter Particulars 1 2 Year Planned production units (a) 5,851 6,327 12,178 *Direct Material required per unit (b) 5.0 5.0 5.0 Direct Material Required for production (c ) 29,255 31,635 60,890 Add: Budgeted ending Direct Material (d) 12,654 15,680 15,680 Total material available for purchase (c+d) 41,909 47,315 76,570 Less: Beginning Direct Material (e ) 11,702 12,654 11,702 Budgeted direct material purchase f= c+d-e 30,207 34,661 64,868 Cost per unit (g) $5 $5 $5 Budgeted Direct Materail purchases $151,035 $173,305 $324,340