Ma225 Managerial Accounting Wk7 Assignment

Assignment Week 7

Brief Exercises: BE9-3, BE9-4, BE10-2, BE10-3, BE13-1, BE13-11

BE9-3 Sales budget data for Palermo Company are given in BE9-2. Management desires

to have an ending finished goods inventory equal to 25% of the next quarter’s expected unit

sales. Prepare a production budget by quarters for the first 6 months of 2014.

Palermo Company budget data

Quarters

1 2 6 month forecast

Expected Unit sales 10,000 12,000

Add: Mgt desired ending finished goods 3,000 a 3,750c

Total required units 13,000 15,750

Less: the beginning finished goods inventory 2,500 b 3,000

Required production units 10,500 12,750 23,250

a12,000 X .25 b10,000 X .25 c15,000 X .25

BE9-4 Perine Company has 2,000 pounds of raw materials in its December 31, 2013, end-

ing inventory. Required production for January and February of 2014 are 4,000 and 5,000

units, respectively. Two pounds of raw materials are needed for each unit, and the esti-

mated cost per pound is $6. Management desires an ending inventory equal to 25% of next

month’s materials requirements. Prepare the direct materials budget for January.

PERINE COMPANY

Direct Material Budget

For month ending Jan. 31, 2014

Units to be produced ........................................................ 4,000

Direct materials per unit................................................... X 2

Total pounds required for production ............................ 8,000

Add: Desired ending inventory (25% X 5,000 X 2) ....... 2,500

Total materials required ................................................... 10,500

Less: Beginning materials inventory

(4,000 X 2 X 25%) ................................................... 2,000

Direct materials purchases .............................................. 8,500

Cost per pound ................................................................. X $6

Total cost of direct materials purchases...