Budgeting material purchases. The Howell Company has prepared ...

[sam.t96]

Budgeting material purchases.
 
  The Howell Company has prepared a sales budget of 43,000 finished units for a 3-month period. The company has an inventory of 11,000 units of finished goods on hand at December 31 and has a target finished goods inventory of 19,000 units at the end of the succeeding quarter.
   It takes 4 gallons of direct materials to make one unit of finished product. The company has an inventory of 66,000 gallons of direct materials at December 31 and has a target ending inventory of 56,000 gallons at the end of the succeeding quarter. How many gallons of direct materials should Howell Company purchase during the 3 months ending March 31?

Question 2

Errors can occur for which of the following reason(s)?
 a. Arithmetic
  b. Recording only half an entry
  c. Recording two debits and no credits
  d. Recording incorrect amounts
  e. All of the answers listed

[Ddddd]

Answer to Question 1

Production Budget:
Finished Goods
(units)
Budgeted sales 43,000
Add target ending finished goods inventory 19,000
Total requirements 62,000
Deduct beginning finished goods inventory 11,000
Units to be produced 51,000

Direct Materials Purchases Budget:
Direct Materials
(in gallons)
Direct materials needed for production (51,000  4) 204,000
Add target ending direct materials inventory 56,000
Total requirements 260,000
Deduct beginning direct materials inventory 66,000
Direct materials to be purchased 194,000

Answer to Question 2

E

[sam.t96]

Thank you

[Ddddd]

No problemo