Pink Floyd Ltd has budgeted the following unit sales:
The finished goods units on hand on 31 December 2017, was 2,000 units. Each unit requires 3 kilograms of raw materials, which is estimated to cost an average of $4 per kilogram. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the kilograms needed for the following month's production. There were 8,640 kilograms of raw materials on hand at 31 December 2017.
Instructions : For the first quarter of 2018, prepare (1) a production budget and (2) a direct materials budget.

Question

Pink Floyd Ltd has budgeted the following unit sales:
  The finished goods units on hand on 31 December 2017, was 2,000 units. Each unit requires 3 kilograms of raw materials, which is estimated to cost an average of $4 per kilogram. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the kilograms needed for the following month's production. There were 8,640 kilograms of raw materials on hand at 31 December 2017.
Instructions : For the first quarter of 2018, prepare (1) a production budget and (2) a direct materials budget.

Quizplus · Accepted Answer

The Answer of Pink Floyd Ltd has budgeted the following unit sales:
  The finished goods units on hand on 31 December 2017, was 2,000 units. Each unit requires 3 kilograms of raw materials, which is estimated to cost an average of $4 per kilogram. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the kilograms needed for the following month's production. There were 8,640 kilograms of raw materials on hand at 31 December 2017.
Instructions : For the first quarter of 2018, prepare (1) a production budget and (2) a direct materials budget.

Pink Floyd Ltd Has Budgeted the Following Unit Sales