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A company is preparing the budgets for the third quarter of 2022.

Projected sales (in units) are as follows:
July 600 Units
August 680 units
September 750 units
October 800 units

The company policy is to have finished goods and materials inventory of 20% of the next month's projected sales and production respectively. 2.5 Kg of materials are required per unit at Sh 15 per Kg. Assuming that opening inventory of 120 units and 300 Kg of materials are expected for July, and 350 Kg of materials stocks at the end of September
Find the :
Production budget
Material budget
Purchase budget

Respuesta :

anthougo

1. The Production budget of the company for the third quarter of 2022 is as follows:

Production Budget:

Ending inventory                  136          150             160

Projected sales (in units)    600         680            750              800

Goods available for sale    736          830            910

Beginning inventory           120           136            150              160

Production units                 616          694            760

2. The Material budget of the company for the third quarter of 2022 is as follows:

Materials Budget:

Production units                   616                  694                  760

Production materials        1,540                1,735                1,900

Beginning inventory         300                  347                   380

Ending inventory               347                  380                  350

3. The Purchase budget of the company for the third quarter of 2022 is as follows:

Purchases Budget:

Ending inventory                347                  380                   350

Production materials       1,540                1,735                1,900

Materials available          1,887                 2,115               2,250

Beginning inventory         300                  347                   380

Purchases                       1,587                1,768                 1,870

Cost of purchases  Sh23,805        Sh26,520         Sh28,050

Data and Calculations:

                                              July     August   September    October

Projected sales (in units)      600        680           750              800

Beginning Inventory:

Finished goods                     120          136             150              160

Ending Inventory:

Finished goods = 20% of next month's sales

Materials = 20% of next month's production

July Beginning Inventory:

Finished goods = 120 units

Materials = 300 kg

September Ending Inventory:

Materials = 350 kg

Cost of materials per kg = Sh15

Materials usage per unit = 2.5 kg.

Thus, the production, material, and purchase budgets have been prepared.

Learn more about preparing budgets at https://brainly.com/question/18803390

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