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E9-5B On January 1, 2017 the Molly Company budget committee has reached agreement on the...

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Accounting

E9-5B On January 1, 2017 the Molly Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000 Ending raw materials inventory: 40% of the next quarters production requirements Ending finished goods inventory: 35% of the next quarters expected sales units Third-quarter production: 8,000 units The ending raw materials and fi nished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. Two pounds of raw materials are required to make each unit of fi nished goods. Raw materials purchased are expected to cost $6 per pound. Instructions (a) Prepare a production budget by quarters for the 6-month period ended June 30, 2017. (b) Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2017.

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