Karam Inc Has Compiled the Following Data in Order to Put

question 73

Essay

Karam Inc. has compiled the following data in order to put together their first quarter operating budget for 20XX:
$\begin{array}{|l|l|l|l|l|}\hline & \text { January } & \text { February } & \text { March } & \text { April } \\\hline \text { Sales (units) } &35,000&31,000&38,000&29,000\\\hline\end{array}$ Additional information:
Karam sells each unit for $95.
Company policy is to have 30% of next month's sales (in units) in ending finished goods inventory. This policy was met in December.
Company policy is to have 40% of next month's production needs in ending raw materials inventory. The production needs for April is 95,500. This policy was met in December.
It takes three pounds of material to produce each unit and the cost is $2.75/pound.
Required:
A. Prepare a sales budget for the January, February and March and for the first quarter in total.
B. Prepare a production budget for January, February and March and for the first quarter in total.
C. Prepare a direct materials purchases budget for January, February and March and for the first quarter in total.

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Definitions:

Product-level Activity

Activities and costs associated with a specific product rather than the business as a whole.

Machine Setup

Machine setup refers to the process of preparing and adjusting machinery to perform a specific task or operation in manufacturing.

Advertising

A method used by businesses to promote their products or services through various media to attract new customers or retain current ones.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing facility to allocate overhead costs to products.