CLINGY COMPANY has budgeted the following unit sales:
Month Budgeted Sales
January 14,000 February 12,000 March 11,000 April 16,000 May 13,000
Production Budget For the Month Ending March 31
March April May Expected unit sales 11,000 16,000 13,000 Desired ending finished goods units 3,200 2,600 Total required units 14,200 18,600 Less: Beginning finished goods units 2,200 3,200 Required production units 12,000 15,400
Direct Materials Budget For the Month Ending March 31
March April Units to be produced 12,000 15,400 Direct materials per unit 2 2 Total materials required for production 24,000 30,800 Desired ending inventory of raw materials 3,080 Total materials required 27,080 Beginning inventory 1,200 Material purchases 25,880 Cost per unit 3.5 3.5 Total cost of direct materials purchases 90,580 Exercise 183Clingy Company budgeted the following unit: sales:January14,000February12,000March11,000April16,000 May13,000 Each unit requires 2 yards of fabric which is estimated to cost $3.50 per yard. It is the company'spolicy to maintain a finished goods inventory at the end of each month equal to 20% of nextmonth's anticipated sales. Clingy Company also have a policy of maintaining a raw materialsinventory at the end of each month equal to 10% of the yards needed for the following month'sproduction. There were 1,200 yards of fabric on hand at March 1.InstructionsPrepare a production budget and a direct materials budget for March. g unit: pril16,000 ed to cost n a finished 20% of o have a he end of he ds of fabric on budget Cash budget Cash beg 25000 Add collection from sales 105000 Total cash available 130000 Less cash disbursements Suppliers 43800 Selling admin 14000 Dividends 30000 Purchases 3000 Total cash disbursements 90800 Excess(deficiency) 39200 Financing Borrowing 9140 Repayments -26000 Interest -2340 Total financing -19200 End cash balance 58400