Budgeting Paper 12


Streeter Company produces plastic microwave turntables. Sales for the next year are expected to be 65,000 units in the first quarter, 72,000 units in the second quarter, 84,000 units in the third quarter and 66,000 units in the fourth quarter. Streeter usually maintains a finished goods inventory at the end of each quarter equal to one half of the units expected to be sold in the next quarter. Due to a work stoppage, the finished goods inventory at the end of the first quarter is 8,000 units less than it should be. How many units should Streeter produce in the second quarter?


Tyler Company produces one product and budgeted 220,000 units for the month of August with the following budgeted manufacturing costs:
Total Costs Cost Per Unit
Variable costs 1,408,000 $6.40
Batch set-up cost 880,000 $4.00
Fixed costs 1,210,000 $5.50
Total 3,498,000 $15.90
The variable cost per unit and the total fixed costs are unchanged within a production range of 200,000 to 300,000 units per month. The total for the batch set-up cost in any month depends on the number of production batches that Tyler runs. A normal batch consists of 50,000 units unless production requires less volume. In the prior year, Tyler experienced a mixture of monthly batch sizes of 42,000 units, 45,000 units, and 50,000 units. Tyler consistently plans production each month in order to minimize the number of batches. For the month of September, Tyler plans to manufacture 260,000 units. What will be Tyler’s total budgeted production costs for September?


Ming Company has budgeted sales at 6,300 units for the next fiscal year and desires to have 590 good units on hand at the end of that year. Beginning inventory is 470 units. Ming has found from past experience that 10% of all units produced do not pass final inspection and therefore must be destroyed. How many units should Ming plan to produce in the next fiscal year? A. B. C. D.


Savior Corporation assembles backup tape drive systems for home microcomputers. For the first quarter, the budget for sales is 67,500 units. Savior will finish the fourth quarter of last year with an inventory of 3,500 units, of which 200 are obsolete. The target ending inventory is 10 days of sales (based upon 360 days). What is the budgeted production for the first quarter?


Data regarding Rombo Company’s budget are shown below
Planned sales 4,000 units
Material cost $2.50 per pound
Direct labor 3 hours per unit
Direct labor rate $7 per hour
Finished goods beginning inventory 900 units
Finished goods ending inventory 600 units
Direct materials beginning inventory 4,300 units
Direct materials ending inventory 4,500 units
Materials used per unit 6 pounds
Rombo Company’s production budget will show total units to be produced of


Swan Company is a maker of men’s slacks. The company would like to maintain 20,000 yards of fabric in ending inventory. The beginning fabric inventory is expected to contain 25,000 yards. The expected yards of fabric needed for sales is 90,000. Compute the yards of fabric that Swan needs to purchase.


Manoli Gift Shop maintains a 35% gross profit percentage on sales and carries an ending inventory balance each month sufficient to support 30% of the next month’s expected sales. Anticipated sales for the fourth quarter are as follows:
October ...$42,000
November ...58,000
December ...74,000
What amount of goods should Manoli Gift Shop plan to purchase during the month of November?


"In preparing the direct material purchases budget for next quarter, the plant controller has the following information available:"
Budgeted unit sales 2000
Pounds of materials per unit 4
Cost of materials per pound $3
Pounds of materials on hand 400
Finished units on hand 250
Target ending units inventory 325
Target ending inventory of pounds of materials 800
How many pounds of materials must be purchased?


Playtime Toys estimates that it will sell 200,000 dolls during the coming year. The beginning inventory is 12,000 dolls; the target ending inventory is 15,000 dolls. Each doll requires two shoes, which are purchased from an outside supplier. The beginning inventory of shoes is 20,000; the target ending inventory is 18,000 shoes. The number of shoes that should be purchased during the year is


True Form Toys is in the process of preparing budgets for the upcoming period. True Form manufactures wooden toy trucks. Sales vary significantly, peaking in the holiday season. Management wishes to maintain an ending inventory equal to 20% of the next month’s sales. Following is True Form Toy’s anticipated sales for the upcoming period. October 2,000 toy trucks November 2,500 toy trucks December 8,500 toy trucks January 1,200 toy trucks February 850 toy trucks How many trucks should True Form Toys manufacture in November?


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