A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. (Enter your answers in thousands of dollars. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,700 units.
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.
Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.
Requirement 1:
Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.)
Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]
The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Budgeted unit sales
8,000
7,000
6,000
7,000
The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,700 units.
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.
Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.
Requirement 1:
Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.)
