O'Reilly Outfitters Inc. has forecasted sales of 32,000 tents for the upcoming year. The anticipated finished goods inventory at January 1 is 5,000 units, but management desires this inventory level to be reduced by 20% on December 31.
Two materials are used in the production of tents: 36 square yards of nylon having a standard cost of $2.00 per yard, and 20 feet of metal tubing having a standard cost of $.50 per linear foot. Raw material inventory information is as follows: (1) Prepare a production budget for the upcoming year.
(2) Prepare a direct materials budget for the upcoming year.

Question

O'Reilly Outfitters Inc. has forecasted sales of 32,000 tents for the upcoming year. The anticipated finished goods inventory at January 1 is 5,000 units, but management desires this inventory level to be reduced by 20% on December 31.
Two materials are used in the production of tents: 36 square yards of nylon having a standard cost of $2.00 per yard, and 20 feet of metal tubing having a standard cost of $.50 per linear foot. Raw material inventory information is as follows:  (1) Prepare a production budget for the upcoming year.
(2) Prepare a direct materials budget for the upcoming year.

Quizplus · Accepted Answer

The Answer of O'Reilly Outfitters Inc. has forecasted sales of 32,000 tents for the upcoming year. The anticipated finished goods inventory at January 1 is 5,000 units, but management desires this inventory level to be reduced by 20% on December 31.
Two materials are used in the production of tents: 36 square yards of nylon having a standard cost of $2.00 per yard, and 20 feet of metal tubing having a standard cost of $.50 per linear foot. Raw material inventory information is as follows:  (1) Prepare a production budget for the upcoming year.
(2) Prepare a direct materials budget for the upcoming year.