Archer Company produces two products: the custom and the basic. The custom sells for $30, and the basic sells for $8. Projected sales of the two models for the coming four quarters are given below. Custom Basic First quarter 11,000 90,000 Second quarter 14,500 88,600 Third quarter 16,500 92,000 Fourth quarter 20,000 91,800 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 800 customs and 1,140 basics were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter's sales for customs and 10 percent of next quarter's sales for basics. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. Archer CompanySales BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Custom: Units Unit price Sales Basic: Units Unit price Sales Total Sales Question Content Area 2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for customs: Archer CompanyProduction Budget for CustomsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced Question Content Area Production budget for basics: Archer CompanyProduction Budget for BasicsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced
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Sales and Production Budgets
Archer Company produces two products: the custom and the basic. The custom sells for $30, and the basic sells for $8. Projected sales of the two models for the coming four quarters are given below.
Custom Basic First quarter 11,000 90,000 Second quarter 14,500 88,600 Third quarter 16,500 92,000 Fourth quarter 20,000 91,800 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 800 customs and 1,140 basics were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter's sales for customs and 10 percent of next quarter's sales for basics.
Required:
Question Content Area
Archer CompanySales BudgetFor the Year Ended December 311. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Custom: Units Unit price Sales Basic: Units Unit price Sales Total Sales Question Content Area
Archer CompanyProduction Budget for CustomsFirst Three Quarters of the Year2. Prepare a separate production budget for each product for each of the first three quarters of the year.
Production budget for customs:
Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced Question Content Area
Archer CompanyProduction Budget for BasicsFirst Three Quarters of the YearProduction budget for basics:
Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced
Direct Materials Purchases Budget: Direct Labor Budget
Macchu Company produces stuffed toy animals; one of these is “Andie the Llama.” Each Andie takes 0.20 yard of fabric (white with irregular black splotches) and 8 ounces of polyfiberfill. Fabric costs $3.40 per yard and polyfiberfill is $0.05 per ounce. Macchu has budgeted production of Andies for the next four months as follows:
| Units | |
| October | 41,000 |
| November | 90,000 |
| December | 60,000 |
| January | 40,000 |
Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 15 percent of the following month's production needs. Inventory of fabric and polyfiberfill at the beginning of October equals exactly the amount needed to satisfy the inventory policy.
Each Andie produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour.
Required:
Question Content Area
1. Prepare a direct materials purchases budget of fabric for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required.
| October | November | December | Total | |
|---|---|---|---|---|
| Units produced | ||||
| DM per unit (yd.) | ||||
| Production needs | ||||
| Desired ending inventory (yd.) | ||||
| Total needed | ||||
| Less: Beginning inventory | ||||
| DM to be purchased (yd.) | ||||
| Cost per yard | ||||
| Total purchase cost |
Question Content Area
2. Prepare a direct materials purchases budget of polyfiberfill for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required.
| October | November | December | Total | |
|---|---|---|---|---|
| Units produced | ||||
| DM per unit (oz.) | ||||
| Production needs | ||||
| Desired ending inventory (oz.) | ||||
| Total needed | ||||
| Less: Beginning inventory | ||||
| DM to be purchased (oz.) | ||||
| Cost per ounce | ||||
| Total purchase cost |
Question Content Area
3. Prepare a direct labor budget for the last quarter of the year showing the hours needed and the direct labor cost for each month and for the quarter in total. Round your answers to the nearest cent, if required.
| October | November | December | Total | |
|---|---|---|---|---|
| Units produced | ||||
| Direct labor time per unit (hours) | ||||
| Direct labor hours needed | ||||
| Cost per direct labor hour | ||||
| Total direct labor cost |
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