Answered

On January 1, 2022, the Sunland Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2022.
Sales units: First quarter 5,700; second quarter 6,840; third quarter 7,980.
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: 8,330 units.
The ending raw materials and finished goods inventories at December 31, 2021, follow the same percentage relationships to production and sales that occur in 2022. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.
Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2022.

Answer :

ANTHOUGOGO

The preparation of Sunland Company's Direct Materials Budget for the First and Second Quarters ended June 30, 2022 is as follows:

                                    First Quarter  Second Quarter

Ending raw materials        12,654             9,996 (3,332 x 3)

Production requirement  26,505            31,635 (10,545 x 3)

Materials available           39,159              41,631

Beginning inventory        10,602             12,654

Purchases                       28,557             28,977

Cost of purchases     $114,228         $115,908 ($28,977 x $4)

Data and Calculations:

                                   First Quarter  Second Quarter   Third Quarter    Total

Sales units                        5,700                 6,840                   7,980

Ending inventory               1,710                  1,995

Units available for sale    7,410                  8,835

Beginning inventory        1,425                   1,710                    1,995

Production requirement 8,835               10,545                    8,330

Thus, the direct materials budget for Sunland Company is prepared as above.

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