David,IncIs Preparing Its Master Budget for the Second Quarter Finished Goods Inventory on March 31: 120 Units
Raw Materials

question 67

Essay

David,Inc.is preparing its master budget for the second quarter.The following sales and production data have been forecasted:
$\begin{array}{llr} &\text { April}&\text { May }&\text {June}&\text { July }&\text {August }\\\text { Unit sales } & 400 & 500 & 520 & 480 & 540 \end{array}$

Finished goods inventory on March 31: 120 units
Raw materials inventory on March 31: 450 pounds
Desired ending inventory each month:
Finished goods:30% of next month's sales
Raw materials:25% of next month's production needs
Number of pounds of raw material required per finished unit: 4 lb.
Number of direct labor hours to produce each unit: 3 hours
Labor rate per hour: $10
(a)How many units should be produced during April and May?
(b)How many pounds of raw materials should be purchased in April?
(c)What is the budgeted labor cost for April?

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Definitions:

Medical Histories

A record of health information about a person over their lifetime, including diseases, treatments, and surgeries.

High-Risk People

Individuals who are considered to have a greater than average chance of experiencing a detrimental event, often in the context of health or finance.

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The amount of money an individual or business must pay for an insurance policy, which serves as compensation for the insurer's coverage of potential financial losses or liabilities.

Asymmetric Information

A situation where one party in a transaction has more or superior information compared to another.