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Patrick inc makes industrial solvents

28/10/2021 Client: muhammad11 Deadline: 2 Day

Accounting - Budgets...Question #1

3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole drum.

Ending inventory for December: _________________ drums

Ending inventory for January: _________________ drums

Ending inventory for February: _________________ drums

4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Drums per unit to one decimal place. Round Price per drum to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Materials Purchases Budget - Drums

For the Months of January and February


January


February

Production in units



Drums per unit



Drums for production



Desired ending inventory



Needed



Less: Beginning inventory



Direct materials to be purchased



Price per drum


$


$

Dollar purchases


$


$

http://sjc.cengagenow.com/media/img/onepixel.gif

4.

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Cornerstone Exercise 9-24 (Algorithmic)
Preparing a Direct Labor Budget

Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is:

January


40,000


February


55,000


March


60,000


Each drum of industrial solvent takes 0.3 direct labor hours. The average wage is $17.10 per hour.

Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Labor Budget

For the Coming First Quarter

Direct Labor Budget:


January


February


March


Total

Units to be produced





Direct labor hrs per unit





Total direct labor hrs





Wage rate


$


$


$


$

Direct labor cost


$


$


$


$

http://sjc.cengagenow.com/media/img/onepixel.gif

5.

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Exercise 9-35
Production Budget

Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. Projected sales (number of speakers) for the coming five quarters are as follows:

http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 2012 was 340 boxes. The company’s policy is to have 20 percent of the next quarter’s sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company’s policy is to have 30 percent of the next quarter’s sales of S12L5 in ending inventory.

Prepare a production budget for S12L7 for each quarter for 2012 and for the year in total.

Stillwater Designs

Production Budget for S12L7

For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total

Sales






Desired ending inventory






Total needs






Less: Beginning inventory






Units produced






http://sjc.cengagenow.com/media/img/onepixel.gif

Prepare a production budget for S12L5 for each quarter for 2012 and for the year in total.

Stillwater Designs

Production Budget for S12L5

For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total

Sales






Desired ending inventory






Total needs






Less: Beginning inventory






Units produced






http://sjc.cengagenow.com/media/img/onepixel.gif

6.

eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet

Exercise 9-36 (Algorithmic)
Production Budget and Direct Materials Purchases Budgets

Smee Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Unit Sales

Dollar Sales ($)

January

60,000

$114,000

February

70,000

133,000

March

80,000

152,000

April

50,000

95,000

Company policy requires that ending inventories for each month be 10 percent of next month's sales. At the beginning of January, the inventory of peanut butter is 35,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met on January 1.

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

Smee Inc.

Production Budget

For the First Quarter of the Year


January


February


March


Total

Sales





Desired ending inventory





Total needs





Less: Beginning inventory





Units produced





http://sjc.cengagenow.com/media/img/onepixel.gif

2a. Prepare a direct materials purchases budget for jars for the months of January and February. Do not include a multiplication symbol as part of your answer.

Smee, Inc.

Direct Materials Purchases Budget for Jars

For January and February


January


February


Total

Production




Jar




Jars for production




Desired ending inventory




Total needs




Less: Beginning inventory




Jars purchased




http://sjc.cengagenow.com/media/img/onepixel.gif

2b. Prepare a direct materials purchases budget for peanuts for the months of January and February. Do not include a multiplication symbol as part of your answer.

Smee, Inc.

Direct Materials Purchases Budget for Peanuts

For January and February


January


February


Total

Production




Ounces




Ounces for production




Desired ending inventory




Total needs




Less: Beginning inventory




Ounces purchased




http://sjc.cengagenow.com/media/img/onepixel.gif

7.

eBookeBookeBookeBookeBookeBookeBookeBookeBook

Exercise 9-37
Production Budget

Pumpro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:

http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-37.e.jpg

Company policy requires that ending inventories for each month be 30 percent of next month’s sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 40,000.

Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Pumpro Inc.

Production Budget

For the Second Quarter


April


May


June


Total

Sales





Desired ending inventory





Total needs





Less: Beginning inventory





Units produced





http://sjc.cengagenow.com/media/img/onepixel.gif

8.

eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet

Exercise 9-38
Direct Materials Purchases Budget

You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.

Fang Company produces decorative plastic items, including hollow plastic pumpkins often used by trick-or-treaters for Halloween. Each pumpkin requires about 5 ounces of plastic costing $0.08 per ounce. Fang molds the plastic into a pumpkin shape and applies decoration to the outside of each pumpkin. Fang has budgeted production of the pumpkins for the next four months as follows:

http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-38.e.jpg

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20 percent of the following month’s production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.

Fang Company

Direct Materials Purchases Budget

For July, August, and September


July


August


September


Total

Units to be produced





Direct materials per unit





Production needs





Desired ending inventory





Total needs





Less: Beginning inventory





Direct materials to be purchased





Cost per ounce


$ 0.08


$ 0.08


$ 0.08


$ 0.08

Total purchase cost


$


$


$


$

http://sjc.cengagenow.com/media/img/onepixel.gif

9.

eBookeBookeBookeBookeBookeBookeBookeBookeBook

Exercise 9-34
Sales Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:

http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

1. Prepare a sales budget for each quarter of 2012 and for the year in total. Show sales by product and in total for each time period. Do not include a multiplication symbol as part of your answer.

Stillwater Designs

Sales Budget

For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total

S12L7:


Units






Price


$


$


$


$


$

Sales


$


$


$


$


$

S12L5:


Units






Price


$


$


$


$


$

Sales


$


$


$


$


$

Total sales


$


$


$


$


http://sjc.cengagenow.com/media/img/onepixel.gif

2. How will Stillwater Designs use this sales budget?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.
_________________

Assignment: Chapter 9 LO 1, 2

1. Preparing a Sales Budget

Patrick Inc. sells industrial solvents in five-gallon drums. Patrick expects the following units to be sold in the first three months of the coming year: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-21.e.jpg

The average price for a drum is $38.

Prepare a sales budget for the first three months of the coming year, showing units and sales revenue by month and in total for the quarter. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Sales Budget

For the Coming Quarter

January

February

March

1st Quarter Total

Units

Price

$

$

$

$

Sales

$

$

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

2. Preparing a Production Budget

Patrick Inc. makes industrial solvents. In the first four months of the coming year, Patrick expects the following unit sales: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-22.e.jpg

Patrick's policy is to have 25 percent of next month's sales in ending inventory. On January 1, it is expected that there will be 4,600 drums of solvent on hand.

Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.

Patrick Inc.

Production Budget

For the Coming Quarter

January

February

March

Total

Sales

Desired ending inventory

Total needs

Less: Beginning inventory

Units produced

http://sjc.cengagenow.com/media/img/onepixel.gif

3. Preparing a Direct Materials Purchases Budget

Patrick Inc. makes industrial solvents sold in five-gallon drums. Planned production in units for the first three months of the coming year is:

January

40,000

February

50,000

March

65,000

Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.

1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon.

Ending inventory for December: _________________ gallons

Ending inventory for January: _________________ gallons

Ending inventory for February: _________________ gallons

Beginning inventory for January: _________________ gallons

2. Prepare a direct materials purchases budget for chemicals for the months of January and February. Round Gallons per unit to one decimal place. Round Price per gallon to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Materials Purchases Budget - Chemicals in Gallons

For the Months of January and February

January

February

Production in units

Gallons per unit

Gallons for production

Desired ending inventory

Needed

Less: Beginning inventory

Direct materials to be purchased

Price per gallon

$

$

Dollar purchases

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole drum.

Ending inventory for December: _________________ drums

Ending inventory for January: _________________ drums

Ending inventory for February: _________________ drums

4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Drums per unit to one decimal place. Round Price per drum to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Materials Purchases Budget - Drums

For the Months of January and February

January

February

Production in units

Drums per unit

Drums for production

Desired ending inventory

Needed

Less: Beginning inventory

Direct materials to be purchased

Price per drum

$

$

Dollar purchases

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

4.

eBookeBookeBookeBookeBookeBookeBookeBookeBook VideoVideoVideoVideoVideoVideoVideoVideoVideo

Cornerstone Exercise 9-24 (Algorithmic) Preparing a Direct Labor Budget

Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is:

January

40,000

February

55,000

March

60,000

Each drum of industrial solvent takes 0.3 direct labor hours. The average wage is $17.10 per hour.

Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Labor Budget

For the Coming First Quarter

Direct Labor Budget:

January

February

March

Total

Units to be produced

Direct labor hrs per unit

Total direct labor hrs

Wage rate

$

$

$

$

Direct labor cost

$

$

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

5.

eBookeBookeBookeBookeBookeBookeBookeBookeBook

Exercise 9-35 Production Budget

Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 2012 was 340 boxes. The company’s policy is to have 20 percent of the next quarter’s sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company’s policy is to have 30 percent of the next quarter’s sales of S12L5 in ending inventory.

Prepare a production budget for S12L7 for each quarter for 2012 and for the year in total.

Stillwater Designs

Production Budget for S12L7

For the Year Ended December 31, 2012

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

Total

Sales

Desired ending inventory

Total needs

Less: Beginning inventory

Units produced

http://sjc.cengagenow.com/media/img/onepixel.gif

Prepare a production budget for S12L5 for each quarter for 2012 and for the year in total.

Stillwater Designs

Production Budget for S12L5

For the Year Ended December 31, 2012

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

Total

Sales

Desired ending inventory

Total needs

Less: Beginning inventory

Units produced

http://sjc.cengagenow.com/media/img/onepixel.gif

6.

eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet

Exercise 9-36 (Algorithmic) Production Budget and Direct Materials Purchases Budgets

Smee Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Unit Sales

Dollar Sales ($)

January

60,000

$114,000

February

70,000

133,000

March

80,000

152,000

April

50,000

95,000

Company policy requires that ending inventories for each month be 10 percent of next month's sales. At the beginning of January, the inventory of peanut butter is 35,000 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met on January 1.

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

Smee Inc.

Production Budget

For the First Quarter of the Year

January

February

March

Total

Sales

Desired ending inventory

Total needs

Less: Beginning inventory

Units produced

http://sjc.cengagenow.com/media/img/onepixel.gif

2a. Prepare a direct materials purchases budget for jars for the months of January and February. Do not include a multiplication symbol as part of your answer.

Smee, Inc.

Direct Materials Purchases Budget for Jars

For January and February

January

February

Total

Production

Jar

Jars for production

Desired ending inventory

Total needs

Less: Beginning inventory

Jars purchased

http://sjc.cengagenow.com/media/img/onepixel.gif

2b. Prepare a direct materials purchases budget for peanuts for the months of January and February. Do not include a multiplication symbol as part of your answer.

Smee, Inc.

Direct Materials Purchases Budget for Peanuts

For January and February

January

February

Total

Production

Ounces

Ounces for production

Desired ending inventory

Total needs

Less: Beginning inventory

Ounces purchased

http://sjc.cengagenow.com/media/img/onepixel.gif

7.

eBookeBookeBookeBookeBookeBookeBookeBookeBook

Exercise 9-37 Production Budget

Pumpro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-37.e.jpg

Company policy requires that ending inventories for each month be 30 percent of next month’s sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 40,000.

Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Pumpro Inc.

Production Budget

For the Second Quarter

April

May

June

Total

Sales

Desired ending inventory

Total needs

Less: Beginning inventory

Units produced

http://sjc.cengagenow.com/media/img/onepixel.gif

8.

eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet

Exercise 9-38 Direct Materials Purchases Budget

You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.

Fang Company produces decorative plastic items, including hollow plastic pumpkins often used by trick-or-treaters for Halloween. Each pumpkin requires about 5 ounces of plastic costing $0.08 per ounce. Fang molds the plastic into a pumpkin shape and applies decoration to the outside of each pumpkin. Fang has budgeted production of the pumpkins for the next four months as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-38.e.jpg

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20 percent of the following month’s production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.

Fang Company

Direct Materials Purchases Budget

For July, August, and September

July

August

September

Total

Units to be produced

Direct materials per unit

Production needs

Desired ending inventory

Total needs

Less: Beginning inventory

Direct materials to be purchased

Cost per ounce

$ 0.08

$ 0.08

$ 0.08

$ 0.08

Total purchase cost

$

$

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

9.

eBookeBookeBookeBookeBookeBookeBookeBookeBook

Exercise 9-34 Sales Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

1. Prepare a sales budget for each quarter of 2012 and for the year in total. Show sales by product and in total for each time period. Do not include a multiplication symbol as part of your answer.

Stillwater Designs

Sales Budget

For the Year Ended December 31, 2012

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

Total

S12L7:

Units

Price

$

$

$

$

$

Sales

$

$

$

$

$

S12L5:

Units

Price

$

$

$

$

$

Sales

$

$

$

$

$

Total sales

$

$

$

$

http://sjc.cengagenow.com/media/img/onepixel.gif

2. How will Stillwater Designs use this sales budget?

The input in the box below will not be graded, but may be reviewed and considered by your instructor. _________________

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