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# Master Budgets and Planning

The production budget for Zink Company shows units to be produced as follows: July, 620; August, 680; September, 540. Each unit produced requires two hours of direct labor. The direct labor rate is currently \$16 per hour but is predicted to be \$16.75 per hour in September. Prepare a direct labor budget for the months July, August, and September.

Rad Co. provides the following sales forecast for the next four months:
April May June July
Sales (units) . . . . . . . . 500 580 530 600
The company wants to end each month with ending finished goods inventory equal to 20% of next month's
sales. Finished goods inventory on April 1 is 174 units. Assume July's budgeted production is 540 units.
Prepare a production budget for the months of April, May, and June.

In addition, assume each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. Beginning raw materials inventory for April was 663 pounds.

Prepare a direct materials budget for April, May, and June.

\$2.19