Ortox Corporation produces supplies for the mining industry. Below is the sales budget in units for...

 

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Ortox Corporation produces supplies for the mining industry. Below is the sales budget in units for 2022: Q1 Budgeted Sales. 15,000 The company is planning to increase the number of sales units by 35% each quarter in the year. The company desires to have an ending finished goods inventory of 40% of the next quarter's budgeted sales units. To produce each unit it costs the company $7 per pound of material, and they need 4 pounds of material per unit. At the end of each quarter, the company desires to have 25 percent of the following month's production requirements on hand. In Q1 2023 the company plans to sell 49,823 units and produce 45,500 units. Required (10 marks: show all steps): A) The CEO of the company wants to know how much the company should budget to spend on Direct Materials for both Q3 & Q4 of 2022. Prepare the necessary calculations to answer this question. B) In Q4 the company actually produced 35,000 units and spent $1,000,000 on direct materials. The CEO is wondering what the flexible variance would be for direct materials for Q4. Based on the variance you calculated what are some possible reasons for why the variance was favorable or unfavorable? Ortox Corporation produces supplies for the mining industry. Below is the sales budget in units for 2022: Q1 Budgeted Sales. 15,000 The company is planning to increase the number of sales units by 35% each quarter in the year. The company desires to have an ending finished goods inventory of 40% of the next quarter's budgeted sales units. To produce each unit it costs the company $7 per pound of material, and they need 4 pounds of material per unit. At the end of each quarter, the company desires to have 25 percent of the following month's production requirements on hand. In Q1 2023 the company plans to sell 49,823 units and produce 45,500 units. Required (10 marks: show all steps): A) The CEO of the company wants to know how much the company should budget to spend on Direct Materials for both Q3 & Q4 of 2022. Prepare the necessary calculations to answer this question. B) In Q4 the company actually produced 35,000 units and spent $1,000,000 on direct materials. The CEO is wondering what the flexible variance would be for direct materials for Q4. Based on the variance you calculated what are some possible reasons for why the variance was favorable or unfavorable?

Answer rating: 100% (QA)

WN1 Preparation of the Sales Budget Sales Budget 2022 2023 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Q... View the full answer