Beric Dandarrion Company plans to sell $500,000$ units of finished product in January $2019.$ Beric anticipates a growth rate in sales of $4\%$ per month thereafter; and, desires a monthly ending finished$-$goods inventory $($in units$)$ of $75\%$ of the following month's estimated sales. There are $200,000$ completed units in the December $31,2018$ inventory.

Each unit of finished product requires $3\mathrm{.}5$ pounds of direct material at a cost of $$1\mathrm{.}50$ per pound. There are $1,500,000$ pounds of direct material in inventory on December $31,2018.$

Required:

A$.$ Prepare a production budget for the quarter ended March $31,2019–$ be sure this is on a quarterly basis; and,

B$.$  Independent of your answer above, assume that Beric plans to produce $1,750,000$ units of finished product for the quarter ended March $31.$

C. If the firm desires to stock direct materials at the end of this period equal to $40\%$ of current production usage, compute the cost of direct material purchases for the quarter.

 

 

Answer rating: 100% (QA)

A Production Budget for the Quarter Ended March 31 2019 To prepare the production budget we need to estimate the number of units to be produced each m... View the full answer