Budgeting Production and Purchases and Just-in-Time Materials Inventory Central Manufacturing, Inc., is preparing budgets for...
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Budgeting Production and Purchases and Just-in-Time Materials Inventory Central Manufacturing, Inc., is preparing budgets for the second quarter. Central produces only one product in its factory. This product requires 4 pounds of material C,3 pounds of material H, and a component, M, that is purchased from another manufacturer. Central operates on a just-in-time basis for material C. As a result, Central maintains no inventory of material C. On April 1, the inventory of material H is expected to be 3,000 pounds and the inventory of component M is expected to be 600 units. Central wants the inventories of H and M at June 30 to be 20% less than the inventories at April 1 . The inventory of finished products at March 31 is expected to be 2,000 units; the desired inventory at June 30 is 4,000 units to allow a buildup for heavy sales in the third quarter. The sales forecast for the second quarter is 14,000 units at $200 each. Budgeted purchase costs are $5 per pound for C,$6 per pound for H, and $50 per component for M. Required a. Prepare the production budget for the second quarter. b. Prepare the direct materials budget for the second quarter
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Budgeting Production and Purchases and Just-in-Time Materials Inventory Central Manufacturing, Inc., is preparing budgets for the second quarter. Central produces only one product in its factory. This product requires 4 pounds of material C,3 pounds of material H, and a component, M, that is purchased from another manufacturer. Central operates on a just-in-time basis for material C. As a result, Central maintains no inventory of material C. On April 1, the inventory of material H is expected to be 3,000 pounds and the inventory of component M is expected to be 600 units. Central wants the inventories of H and M at June 30 to be 20% less than the inventories at April 1 . The inventory of finished products at March 31 is expected to be 2,000 units; the desired inventory at June 30 is 4,000 units to allow a buildup for heavy sales in the third quarter. The sales forecast for the second quarter is 14,000 units at $200 each. Budgeted purchase costs are $5 per pound for C,$6 per pound for H, and $50 per component for M. Required a. Prepare the production budget for the second quarter. b. Prepare the direct materials budget for the second quarter 