Butler Manufacturing manufactures two products (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows:

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\text { Units of Product }

\begin{array}{lr}2016 & \text { Regular }& \text { Deluxe } &\text { Total }\\\text { July } & 10,000&15,000&25,000 \\\text { August } & 6,000 &10,000&16,000\\\text { September } & 9,000&14,000&23,000 \\\text { October } & 8,000&12,000&20,000\end{array}

It takes 2 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company's policy to maintain an inventory of direct materials on hand at the end of each month equal to 30% of the next month's production needs for the Regular product and 20% of the next month's production needs for the Deluxe product. Direct materials inventory on hand at June 30 were 6000 pounds for the Regular product and 15000 pounds for the Deluxe product. The cost per pound of materials is $5 Regular and $8 Deluxe.
Instructions
Prepare separate direct materials budgets for each product for the third quarter of 2016.

Budgeting Can Be an Important Management Tool If Implemented Properly

Essay

Correct Answer:VerifiedWhen budgets are used properly positive ...View AnswerUnlock this answer nowGet Access to more Verified Answers free of chargeView Full Answer For Free

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