Dallas Company is preparing a master budget for the 1 st quarter of 2016. Given the following
Question:
Dallas Company is preparing a master budget for the 1st quarter of 2016. Given the following information, you are to prepare using formulas the following:
(A) Production Budget, (B) Direct Materials Budget, and (C) Cash Payments for Direct Materials Purchases Budget for the 1st quarter of 2016.
For the budgets, you need to make them adaptable so that if I change the sales budget and/or materials cost per unit, the budgets will automatically update for these changes.
Facts:
Projected
Sales: Jan 1,100 units at $10 per unit
Feb 1,150 units at $10 per unit
March 1,200 units at $10 per unit
April 1,150 units at $10 per unit
May 1,100 units at $10 per unit
Finished Goods Inventory:
Policy requires ending inventory to be 10% of next month’s projected sales. Beginning Inventory as of Q1 was 100 units.
Direct Materials Inventory:
Each unit produced requires 3 pounds of Direct materials. Direct Materials costs $3 per pound. Policy requires ending Direct materials to be 30% of next month’s production needs. They currently have 1,000 pounds of Direct materials on hand as of the Beginning of Q1.
Materials Purchases:
All Direct Materials all purchased on account, with terms of n/15. Because inventory is purchased evenly throughout the month, ½ of the purchases in a month are paid in the month of purchase and the other ½ are paid in the following month. There are currently $600 owed as of the beginning of the Q1 (all of that will be paid in Jan.).