Feathered FriendsFeathered Friends makes backyard birdfeeders.The company sells the birdfeeders to home improvement stores for$12 per birdfeeder. Each birdfeeder requires 3.0 board feet of?wood, which the company obtains at a cost of $2 per board foot. Thecompany would like to maintain an ending stock of wood equal to 10%of the next? month's production requirements. The company wouldalso like to maintain an ending stock of finished birdfeeders equalto 25% of the next? month's sales. Sales data for the company isas? follows:
| Units |
October actual sales (prior year). . . . . . . . | 96,000 |
November actual sales (prior year). . . . . . | 89,000 |
December actual sales (prior year). . . . . . | 80,000 |
January projected sales. . . . . . . . . . . . . | 76,000 |
February projected sales. . . . . . . . . . . . . . | 86,000 |
March projected sales. . . . . . . . . . . . . . . . . | 97,000 |
April projected sales. . . . . . . . . . . . . . . . . . | 110,000 |
| In any given? month, 20% of the total sales are cash? sales, while the remainder arecredit sales. |
|
The? company's collection history indicates that 60 %
of credit sales is collected in the month after the? sale, 30% iscollected two months after the? sale, 5% is collected three monthsafter the? sale, and the remaining 5%
is never collected. |
|
Assume that the total cost of direct materials purchases inDecember was $520,000. The company pays 60%
of its direct materials purchases in the month of? purchase, andpays the remaining 40% in the month after purchase. |
Prepare the direct materials purchases budget for the firstthree months of the? year, as well as a summary budget for thequarter. Assume the company needs 105,000
board feet of wood for production in April. ?(Round your answersto the nearest whole? dollar.)
Feathered Friends |
Direct Materials Budget |
For the Quarter Ended March 31 |
| | |
| January | February | March | Quarter |
Units to be produced | | | | |
Multiply by: Quantity (board feet) of DM needed per unit | | | | |
Quantity (board feet) needed for production | | | | |
Plus: Desired ending inventory of DM | | | | |
Total quantity (board feet) needed | | | | |
Less: Beginning inventory of DM | | | | |
Quantity (board feet) to purchase | | | | |
Multiply by: Cost per board foot | | | | |
Total cost of DM purchases | | | | |
