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22. LO.3 (Production, direct materials, and direct...




22. LO.3 (Production, direct materials, and direct labor budgets) Gerrad Manufacturing has projected sales of its product for the next six months as follows: January 300 units February 700 units March 1,000 units April 900 units May 400 units June 300 units The finished product requires 3 pounds of raw material and 10 hours of direct labor. Gerrad tries to maintain a Finished Goods ending inventory equal to the next two months of sales and a Raw Material ending inventory equal to one-half of the current month?s production needs. January?s beginning inventories are expected to conform to company policy. a. Prepare a production budget for February, March, and April. b. Prepare a forecast of the units and cost of raw material that will be required for February, March, and April. Th e expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April. c. Prepare a direct labor budget (assuming a $12 per hour rate) for February, March, and April.


Paper#4684 | Written in 18-Jul-2015

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